Welcome to the Axactor SE 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 Axactor's fourth quarter presentation for 2020. This presentation will be divided into four 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, Axactor has revised the company 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&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 fourth quarter was expected to continue the positive performance trend, but we also underlined that we did not expect to see the traditional seasonal increase in Q4 versus Q3. There were several reasons, such as the COVID-19 second wave and the challenging environment for closing new third-party collection agreements. For the fourth quarter, we delivered EUR 95 million in gross revenue, a total income of EUR 58 million, a cash EBITDA of EUR 64 million, and a reported EBITDA of EUR 21 million. 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 EUR 330 million, a total income of EUR 205 million, and a cash EBITDA of EUR 213 million. The reported EBITDA was obviously highly affected by portfolio revaluations and ended up at EUR 36 million.
The return on equity to shareholders ended, unfortunately, in negative territory for the year at -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 three segments, starting with NPL, we did achieve a gross revenue of EUR 69 million. This was mainly a result of normalization towards pre-pandemic levels, and that we did invest north of EUR 200 million 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 third-party collection, or 3PC as we also call it, the gross revenue increased substantially from Q3 up from EUR 11 million to EUR 14 million. Unfortunately, we are not back at pre-pandemic levels yet. As mentioned during the Q3 presentation, we have experienced that closing a 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, but we now see that these effects are diminishing, and we expect 3PC volumes to pick up during 2021 and onwards. For our runoff segment, REOs, the sales came in at EUR 12 million, which was a positive surprise in our view. The trend from Q3 continued with higher volumes at better prices than anticipated.
REOs is only accounting for a small part of our balance sheet, some 3% of a total book value exposure on portfolios. On the next slide, we can see the positive gross revenue trend is also translating into margin expansion. In this graph, we focus on our core business segments, NPL and third-party collection. The REOs 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 EUR 1.5 million or 9%.
This is crucial for Axactor as one of our main strategic goals is to be industry leading on cost to collect. Personnel costs are a significant part of that equation. Operating expenses are also down but o nly a moderate 1%. In Axactor, we are constantly focusing on our cost position. 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%. 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, Axactor is taking a negative revaluation on the NPL book of EUR 8.9 million in Q4, which takes the total income down to EUR 33 million. As you probably remember, we also did a negative revaluation of the NPL book of EUR 27 million 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 is 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 2022. The revaluation is also partly explained by some underperformance in Q4. We obviously regret that we must revaluate, but the fact is that the pandemic situation has lasted longer than what we assumed when we revised the curves in second quarter 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 active forecast in the fourth quarter, 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 EUR 8.9 million, are now aligned with the current performance and is shown as the orange curve line. There are different ways of implementing curve adjustments, but Axactor takes a prudent approach, and accounting-wise, we assume historical underperformance as loss. This is a more conservative approach than one assuming that all or parts of the underperformance can be recaptured in the future.
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. Turn to the next slide for more in-depth comments on the 3PC development. Already mentioned, the 3PC revenues reached EUR 14 million for the quarter, showing that the recapture after the first pandemic wave is well underway. The business segment is still burdened by the pandemic, as we are down 11% year-over-year. The positive note, we are recording the highest contribution margin since second quarter 2019 of 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 run-off segment, REOs. You have already seen the REO financial performance for the quarter, I will not repeat it. As you probably remember, Axactor did an impairment accrual of EUR 27 million in the first half of 2020. 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 to provide us with an updated external valuation for the entire portfolio. In Q3, we released approximately EUR 5 million of this accrual due to higher sales volumes and better prices than first anticipated. The external valuations are now finalized, they support a higher valuation than 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 million and hence further releasing close to EUR 6 million of the initial accrual done in first half of 2020. The fully consolidated book value at year-end was EUR 79 million, and Axactor's exposure is approximately 40% of this amount due to minority interest in the structure. On the next slide, we present more details on the reported financials. If we start with total income, it was obviously burdened with the EUR 8.9 million negative NPL revaluation ending up at EUR 58 million for the quarter. The reported EBITDA margin came in at 36%, also burdened with the same negative revaluation. The EUR 5.9 million accrual release on REOs pulls the EBITDA in the opposite direction. Cash EBITDA came in at EUR 64 million 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, Axactor reported an EBITDA of EUR 21.3 million. Depreciation and amortization were at an expected level of EUR 3 million. The net financial items are extraordinarily high, with EUR 17.7 million booked. The reason is that we have included an interest cost write-down of capitalized fees of EUR 7 million due to the refinancing of the company. The tax expense came in at EUR 2.7 million positive as we got a net tax income from recognition of deferred tax assets in the quarter. This translates into a net profit after tax of EUR 3.3 million with a corresponding 3.6% annualized return on equity, excluding non-controlling interest.
On the next slide, we have tried to summarize some significant items affecting the quarter. On total income, revaluation effects will affect the total income by EUR 10.3 million. Also, gross revenues have been increased by EUR 3 million due to a valuation increase on our forward flow contracts, as they are treated as a financial instrument. Adjusting for these two items, the total income will increase from the reported number of EUR 58.5 million up to EUR 65.8 million. The REO accrual reversal will reduce our REO cost of sale, and hence, increase the reported operating expense from EUR 37.1 million to EUR 43 million. Net change on this item gives an EBITDA of EUR 22.8 million compared to the EUR 21.3 million reported EBITDA. On net financial items, the effects from the capitalized loan fees will be partly netted by a positive currency effect of EUR 3.7 million.
In total, these items would bring the profit before tax up to EUR 5.5 million compared to the EUR 0.7 million 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 multi-step financial transaction to improve our competitive position. The transaction consisted of four main elements. An equity issue of EUR 30 million that was closed in January this year. Last week, the subsequent repair offering was also closed, securing another EUR 20 million of equity to the company. Our unsecured bond was refinanced. We also refinanced our main bank facility with DNB and Nordea. Finally, we rolled up Axactor Invest, effectively buying around 50% stake in the SPE. Axactor will own 100% of Axactor Invest.
The RCF was merged with our main credit facility, and we also refinanced the mezzanine 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 cost. This was achieved through better terms and improved structure on the RCF facility. The roll-up of the SPE triggered a mandatory offer from Geveran for 100% of the shares in Axactor, as Geveran exceeded one-third ownership of the company. The mandatory offer is at NOK 8 , and the board of directors in Axactor has recommended shareholders not to accept. The full transaction, including the mandatory offer from Geveran, will be concluded within the first quarter. 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 in Axactor and Axactor Invest was merged into one credit facility of EUR 620 million, with EUR 75 million 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 forma overview. The transaction has obviously several effects on our balance sheet. The most important are, on the asset side, the cash increased by EUR 29 million net of fees. The equity will increase by close to EUR 100 million. The equity ratio increases from 28% up to 31%. Non-controlling interest will decrease from EUR 74 million to EUR 25 million. Also, we will have a reduction of close to EUR 20 million 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, Axactor has revised its strategy. If we could please move to slide 18, I will share some of the details from that process. Even though Axactor has revised the strategy, you 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 three 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 three. Axactor 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 economies of scale. Finally, we are using the concept OneAxactor, 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 our countries operate on, cross-country collaboration and competence sharing, continuously develop 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 Axactor, the idea of maximizing the risk-reward is key.
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 our 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 Axactor 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.
Axactor will obviously focus on purchasing of non-performing loans, at the same time, we need to capitalize more on our high-quality debt collection platform. This means more focus on 3PC and capitalized business. This will increase volume and bring our contribution margin up over time. This is also why we are putting more effort into partnerships where we both service and buy claims from a few banks in every market. In other words, Axactor will prioritize debt that we know well, both from a collection perspective, also from a compliance perspective, either through previous acquisitions or through 3PC 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 3PC 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 NPL and 3PC as many banks and financial institutions often outsource portfolios on 3PC before they, after some time, choose to sell the portfolio. The average claim size in the bank finance space is a better match with Axactor's operational setup as we are more capable of handling claims of a certain size and not so much small tickets. Furthermore, we will focus on business to consumer unsecured and have less focus on secured portfolios. Already today, secured NPLs are a very small part of Axactor's balance sheet, as you can see if we move on to the next slide 20.
To continue on the same note, 94% of Axactor's portfolio book value exposure is within our strategic core, unsecured non-performing loans. The vast majority of these unsecured loans are related to business to consumers. The remaining 6% is equally split between secured NPLs and REOs. The EUR 48 million nominated as non-Axactor exposure is related to minority interest in the REO structure. If you turn to the next page, we will show a pro forma graph on how return on equity would have looked like excluding the REOs. There is no big secret that profitability on REOs has been disappointing since acquisitions back in 2018. The return on equity during the pandemic has been weak both for Axactor and the industry as such.
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 REOs is four percentage points in Q4 2019. Even more interesting was the underlying development in return on equity for the core segments, with strong improvements 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 3PC going forward. Axactor 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 normalize working conditions for our employees and normalize debtors' willingness and ability to resolve their debt. We expect increased 3PC volumes and expect lower NPL prices as part of the COVID-19 aftermath. Continued margin expansion as ongoing performance improvement initiatives materialize is expected. We will have reduced funding costs and increased investment capacity following the refinancing and equity raise. Finally, we expect a gradual normalization of the tax rate towards an estimate of 25%. On the more challenging side, we see COVID-19 increase pressure on our employees working on home office.
We also experience that the pandemic increased pressure on debtors' short-term willingness 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 fourth quarter. Axactor delivered a Q4 that showed a positive gross revenue trend in all segments. However, due to the refinancing of the balance sheet and 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 EUR 50 million in fresh equity, extended maturities for three years on all main credit facilities, and reduced the funding cost for Axactor. Our revised strategy is under implementation. The organization is very much aligned and has been involved throughout the whole process.
Axactor is carefully optimistic in the short term as the pandemic situation eases, but we are not 100% in the clear yet. Curve revisions have been done for 2021 and first half of 2022, and we will seek to be as transparent as possible with the market regarding the development. Several positive drivers for return on equity are definitely present. With that, we conclude the presentation and open it up for Q&A, and also remind everyone that you can find more information in the supporting information and appendix in this presentation.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If your wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Håkon Astrup from DNB Markets. Please go ahead.
Thank you. Thank you for the presentation. Two questions from me. The first one is on investments. You stated in the report that you expect NPL investments to exceed EUR 200 million this year. Can you shed some more light on how conservative you are here? Is your base case EUR 205 million or is your base case EUR 300 million? That is the first question. The second question is on third-party collections. You state that the prospect looks good for 2021. Should we expect total revenue on 3PC to be above the 2019 level this year? Thank you.
Thank you, Håkon. Yes, thank you for the questions. Let me start with the first one regarding the investment level. You are right, we have stated in the report that it will be north of EUR 200 million. I think if you look at our theoretical capacity, it's obviously much higher. It's probably in the area EUR 350 million. 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. If you ask if we have a little bit higher internal ambitions than EUR 200 million, the answer is yes. It all depends on the attractiveness of the opportunities coming to the market. If you look at the first half, we see that there are some opportunities, but in the one-off market, there's not so many yet.
I think we have to wait for the second half to really see the large volumes coming to the market. We are working on also some bilateral agreements. We also see that forward flow renewals are definitely being discussed for the moment. I think given that we have only committed EUR 14 million in Q1, I think it's fair to have a moderate view on how much we're going to invest in Q1 this year. For the full year, we are stating that at least EUR 200 million. Regarding 3PC, I will answer this maybe a little bit broader than what you asked, Håkon, because we have almost the same question from several here. If we look at 3PC, last year, we saw that during Q2 and Q3, very few new contracts were signed for obvious reasons.
The pandemic in Q1 and partly into Q3, but also the vacation period in Q3 makes Q3 a little bit slower when it comes to new contract signings. This definitely shifted in Q4. We have signed a lot of new contracts. What I think is also good to note is that it's mainly within bank finance, and also it's widely spread across our countries. That is definitely positive. We also see very healthy pipelines into this year. We also have to remember that the onboarding does not necessarily start immediately. Even though we sign a contract, the contract needs to be finalized with the current lender, and then we have an onboarding process. 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 the second half of this year. When it comes to terms and conditions on the 3PC contract, which is a question from Jonas here, I think that they are not very changed from before. If you remember how this actually works on the 3PC, a lot of the fees are, for all practical purposes, set by the regulators through fee regimes, especially here in the Nordics. Of course, there could be some differences on fees, on surveillance, and other parts of 3PC. All in all, we have not noted any changes in the terms as such on the 3PC contracts that we sign for the moment.
Yes, on the last part of your question, Håkon, if we should expect 3PC to be higher than 2019 level, the short answer to that is yes.
Thank you. That was very clear.
The next question comes from the line of Ulrik Zürcher from Nordea Markets. Please go ahead.
Thank you for taking my question. I was wondering if you could put more flavor on the underlying reasons for your revaluation of the NPL portfolio and the change quarter-on-quarter. For example, is it the companies and the households, are they doing worse than expected QoQ? Is this more related to bottlenecks in collection infrastructure or the value chain, if you will? I have a second question. How does the revised NPL forecast look so far in the quarter? That's my two questions. Thank you.
Yeah. If you look at the reasons for the impairment, I think we stated also in the presentation. It is both underperformance in Q4, which you clearly see on page seven in the presentation. It is there, the difference between the green line and the bar. You see this is the actual underperformance in Q4. Then it is also partly the difference between the current active forecast and the forecast we had before we did the write down. The reason for it is, if you remember what we said when we did the write down back in Q2, we said we are adjusting the curves for 2020. The reason for not adjusting further was that at that point in time, we did have no visibility or very low visibility about the three next quarters.
What we have seen over 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. For Q4, we did not meet the active forecast. We are taking the approach that we also look now for the active curves for 2021 and for also parts of 2022 and do further adjustments. It's maybe a bit, what 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 underline in the presentation that's not necessarily the truth. 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.
Yeah, I was just wondering how the revised forecast looks on collection so far in the first quarter of 2021.
Yeah, for January, you mean? It's probably a little bit on the soft side, but no big deviation.
I was just wondering, just to follow up to the first part. 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 you can call the infrastructure of basically it's a lockdown as soon as you can't collect rather than households and companies necessarily having the long-term capability to pay. It's something that we should take into account, or is it just since you write down into 2022 as well, it seems a bit strange.
Yeah. 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 than what we expected. This is not the first time we see this, that the banks are holding back on refinancing around year-end. I'm not sure exactly why, but the hypothesis is that the budgets are fulfilled, and they slow down on handling applications for restructuring or refinancing during Christmas time. Now we see that it starts up again from end of January. I think 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. I would say that the refinancing effect is more severe than saying that the debtors are not able or willing to pay in the short term, I think.
Yeah. Thank you for those details. That's all from me.
We have one more question from the line of Joakim Svingen from Arctic. Please go ahead.
Good morning, and thank you for taking the questions. I was going to ask around the same things that Ulrik asked. I have a couple of follow-ups, if that's okay. Could you perhaps elaborate a bit on the geographies most affected in the write-down and the collection revisions you have done? The second one is relating to operating expenses, how we should expect that to develop in the first half of 2021, given the expected increase in activities and collections. Thanks.
Yeah. As you know, we are not sharing very much details on which countries we are doing write downs. 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. Also actually a couple of small ones in Sweden due to, you know that we have had these challenges with bailiff system in Sweden, which has led to underperformance over a relatively long time. We see now that we are recapturing it, still we decided to do some adjustments on the Swedish book. 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.
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. We don't have any targets to share with you on that, Joakim.
Yeah, that's fine. Thank you.
As there are no further audio questions, I'll hand it back to the speakers.
We have some questions here that have come in on email. Let's see here. We have one, "How much do you expect to invest?" I think we have answered it. "What is already committed in forward flows?" The current commitments is they are in the range of EUR 45 million-EUR 50 million, 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 commitment that we have currently quarter by quarter for 2021. Regarding the tax rates, I think we don't give any specific guiding on it, other than say that we are continuously working to take it down. I think I will have to wait a little bit there on to give more details on it. We are working on reducing it over time.
I think we have said that we will try to get it down to 25% over a period of three, four years. Maybe you could just do a linear assumption and use that as a proxy. We have a question here more from Jonas in ABG. "Have you received any interest from PE specialized funds in your REO book?" Yes, we have. The challenge here is that there have actually been several parties looking at it, but for us, it's related with a lot of sunk costs, and we also still have a CM1 margin on it. If we were to sell it now to a specialized fund, we probably have to give them a certain discount.
We think that the best way for us to manage the tail of the REO 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 is starting to become a very small part of our balance sheet, some 3%, I think it is. That's the way I think we need to handle this going forward. If, of course, we receive a bid that we can accept, we are obviously ready to divest the whole book at once. 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." Yeah, we don't have a split on the underperformance as such.
I think I've touched upon some of it. It's also a little bit hard for you probably have both direct and indirect COVID effects. If you looked at the indirect effect, it's hard for us to say how much has COVID affected the banks when they decide to hold back on refinancing, for example. Which I said 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' willingness and ability to pay. To be quite honest, I don't know exactly the different reasons for the underperformance. It's obviously on a mix of restructuring. It could also be that 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 and 2018, we didn't have that much data as we have today. We also acquired portfolios from banks, I would say, of a certain quality that we are not buying from today. Today we are buying, I would say, much higher quality debt than we did in 2017 and 2018. What I also mentioned earlier, the secured portfolios in Spain, that has been a challenge, and I think there it's 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.
I don't know if we have any more questions from the audience.
There are no further questions from the phone.
Well, then thank you so much for taking the time and participated in this presentation. I wish all of you a nice day. Bye-bye.
This concludes our conference call. Thank you all for attending. You may now disconnect your line.