Note 1 - Accounting principles

Table of contents

1. Corporate information
2. Statement of compliance
3. Changed accounting principles
4. New standards, amendments and interpretations that have not yet been applied
5. Critical estimates and assessments
6. Consolidation
7. Segment reporting
8. Foreign currency translation
9. Financial assets and liabilities
10. Hedge accounting
11. Leasing
12. Intangible assets
13. Tangible assets
14. Provisions
15. Income and expenses
16. Employee benefits
17. Taxes
18. Earnings per share
19. Equity
20. Related-party transactions
21. Cash flow statement
22. Parent Company accounting principles

1. Corporate information

The Annual Report is issued as of 31 December 2021 by Hoist Finance AB (publ), CIN 556012-8489, the Parent Company of the Hoist Finance Group (”Hoist Finance”). The parent company is a Swedish public limited company, registered in Stockholm, Sweden.

The address of the head office is Box 7848, 103 99 Stockholm. The Group is licensed and Supervised by the Swedish Financial Supervisory Authority.

The consolidated accounts for financial year 2021 were approved by the Board of Directors on 10 March 2022 and will be presented for adoption at the Annual General Meeting on 13 April 2021.

2. Statement of compliance

Accounting principles of the Group

The consolidated accounts for Hoist Finance AB (publ) were prepared in accordance with the international Financial Reporting Standards (IFRS) issued by the international Accounting Standard Board (IASB) and interpretations issued by the IFRS Interpretation committee as adopted by the EU. The Annual Report was prepared in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559), the Swedish Financial Supervisory Authority’s regulations and guidelines on annual accounts in credit institutions and securities companies (FFFS 2008:25) including applicable amendments, and the Swedish Financial Reporting Board’s recommendations RFR 1 “Supplementary Accounting Rules for Groups”.

Accounting principles of the Parent Company are presented in section 22.

3. Changed accounting principles

New and amended standards adopted in the financial statements

Compared with the 2020 Annual Report, an IFRC IC update constitutes a material change concerning cloud-based IT solutions and Hoist Finance is also affected by the IBOR reform.

In March, IFRC IC published an agenda decision on the reporting of configuration and customisation costs that arise in cloud-based IT solutions (Software as a Service, SaaS). Hoist Finance has carried out several digitalisation projects and, accordingly, a review has been conducted to determine whether reporting of these projects falls under this decision. Procedures have been updated and the projects have been adapted to the new rules. No material changes in estimates and assessments have been made that affect previous accounting.

It is also worth mention that the amendments to IAS 39, IFRS 9, IFRS 7 and IFRS 16, which were made due to uncertainty arising from the ongoing interest rate benchmark reform (IBOR reform phase 2), came into effect on 1 January 2021.

As per year end, Hoist Finance was exposed to IBOR reform via Interest rate derivatives denominated in GBP and PLN as well as floating rate holdings in the liquidity buffer denominated in SEK. For the interest rate derivatives, the outstanding volume was GBP 210m with contract maturities spanning from 9 months to 10 years, and PLN 230m with maturities spanning 9 months to 7 years. The notional volume of floating rate holdings in the liquidity portfolio was SEK 3.6 billion with maturities up to 5 years.

As to the IBOR reform, only GBP LIBOR was affected for Hoist Finance (as WIBOR and STIBOR remain unchanged). Hoist Finance has decided to apply the transition fallback mechanism regarding the IBOR transition, which involves replacing GBP LIBOR with SONIA plus the defined add-on. Hoist Finance considers the transition fallback mechanism to be market standard and designed in a manner that prevents Hoist Finance from being affected in any material way, either positively or negatively.

Regarding a pending STIBOR transition, any potential changes are still largely unknown and will occur years in the future. Hoist Finance has therefore not addressed this issue as of now and is awaiting further input before taking any action.

Other amendments

No other IFRS or IFRIC amendments that came into effect in 2021 had any significant impact on the Group’s financial reports or capital adequacy.

In all other material aspects, the Group’s and the Parent Company’s accounting policies, bases of calculation and presentation are unchanged compared with the 2020 Annual Report.

4. New standards, amendments and interpretations that have not yet been applied

No new or amended standards are expected to be applied in 2022 that will have a material effect on Hoist Finance's accounting.

5. Critical estimates and assessments

The preparation of financial reports in accordance with IFRS requires that Management make estimates and assessments that affect the application of the accounting principles and the carrying value of assets, liabilities, revenue and expenses. Estimates and assessments are based on historical experience and a number of other factors that are deemed reasonable in the prevailing circumstances. The result of these estimates and assessments is then used to assess the carrying values of assets and liabilities that are not otherwise clearly indicated by other sources. Actual outcomes may deviate from these estimates and assessments.

Estimates and assessments are evaluated regularly, and the effect on carrying values is recognised through profit or loss. Changes in estimates are reported in the period in which the change is made, provided the change has affected only this period, or the period the change was made and future periods if the change affects both current and future periods.

Estimates and assessments made by Management that have a significant impact on the consolidated financial statements and which may affect the consolidated financial statements in subsequent years are described in more detail below.

Measurement of acquired credit-impaired loan portfolios

As described in Note 18 "Acquired Loan Portfolios", the recognition of acquired non-performing loans is based on the Group’s own forecast of future cash flows from acquired portfolios. Although the Group’s cash flow forecasts have historically been reasonably accurate, future deviations cannot be ruled out. The Group applies internal rules and a formalised decision-making process for the adjustment of previously adopted cash flow forecasts. The internal rules are based on a 15-year period. The effective interest rate for acquired credit-impaired loan portfolios is based on the initial cash flow forecast specified at acquisition date.

As regards credit-impaired loans, new assumptions made during the year indicate lower expected returns over the entire life of selected portfolios, primarily in the UK, due to Covid-19.

Hoist Finance continuously monitors the development of the Group’s loan portfolios and markets and ways in which these are affected by Covid-19. Over time, this has become more certain as the markets start to exhibit normal economic behaviour and judicial processes.

Measurement of acquired performing loans

The Company also acquires performing loans, for which both effective interest rate and cash flow are subject to the contractual obligations defined at acquisition. The effective interest rate here is based on initial expected cash flows as per the customer contract, discounted by the purchase price. Cash flows are regularly adjusted as receivables are paid or customer terms and conditions are renegotiated.

The measurement of the expected credit loss (ECL) for financial assets measured at amortised cost is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behaviour (e.g., the likelihood of customers defaulting and the resulting losses). A number of assessments are required in applying the accounting requirements for measuring ECL, such as:

  • Determining criteria for significant increase in credit risk
  • Choosing appropriate models and assumptions for ECL measurement
  • Establishing the number and relative weightings of forward-looking scenarios for each market

For performing loans, Hoist Finance has found no reason to adjust model assumptions due to Covid-19 beyond the scope of the directives issued by the EBA. Payment holidays have been granted to virtually all who have applied and have proven to be a good tool for customers in Hoist Finance’s portfolios.

Detailed information on these estimates and assumptions is included in Note 33 "Risk Management".

Measurement of deferred tax assets

Deferred tax assets pertaining to loss carry-forwards or other future tax deductions are reported to the extent it is deemed probable that they may be offset against future tax surplus. Carrying values for deferred tax assets at each balance sheet date are presented in Note 13 "Tax".

Measurement and impairment testing of goodwill

Assessments are required to identify the cash-generating units. In the annual impairment test, the value in use of the cash-generating units is calculated by discounting estimated future cash flows. Cash flow forecasts are based on an assessment of future collections, portfolio acquisitions, and cost accounting and revenue recognition. Additional details on impairment testing for goodwill are presented in Note 20 "Intangible Assets".

Assessment of control in conjunction with securitisation

In 2021 Hoist Finance continued to conduct parts of its business through Special Purpose Vehicles (SPV). These companies acquire credit-impaired loan portfolios and issue bonds to investors, secured by the acquired assets. A securitisation programme is set up for each SPV, with predetermined criteria that are part of the companies’ initial design. Through its senior bond holdings and issuance of financial guarantees, the Group is exposed to variations in returns from these companies. Hoist Finance also runs the day-to-day service of the receivables pursuant to issued service agreements. In assessing whether Hoist Finance has control over the SPVs, consideration is given to whether Hoist Finance handles the key decisions that have the greatest impact on these receivables and is exposed to variable returns. The Group has therefore concluded that the SPVs should be consolidated.


Assessments are required to determine whether existing legal or informal obligations exist and to calculate the probability, timing and amount of outflows. Claims arising from civil proceedings and official matters require a higher degree of assessment than other types of provisions.

Additional Tier 1 capital

Hoist Finance’s Additional Tier 1 capital (AT1 capital) comprises depreciable perpetual debt instruments. Hoist Finance has no obligation to pay cash or other financial assets to the holders of the instruments. In other words, Hoist Finance has a unilateral and unconditional right to choose not to make payments. Therefore, AT1 capital does not comprise a financial liability, and is instead recognised as equity.

6. Consolidation


Subsidiaries are entities over which the Parent Company has controlling influence. Controlling influence exists when the Parent Company can exert influence over an investment, is exposed to or has the right to receive variable returns as a result of the investment, and is able to use its influence over the investment to affect returns.

The Group uses the acquisition method of accounting to report business combinations. The consolidated acquisition value is determined by an acquisition analysis conducted in connection with the acquisition. The analysis determines the acquired identifiable assets, acquired liabilities and contingent liabilities. The acquisition value of subsidiary shares and operations is comprised of their fair value as at acquisition date for assets, liabilities that arise or are transferred, and issued equity instruments transferred as consideration in exchange for the acquired net assets. Transaction costs directly attributable to the acquisition are expensed as incurred.

In business combinations where acquisition cost exceeds the net value of the acquired assets, liabilities and contingent liabilities, the difference is reported as goodwill. When the difference is negative, it is reported directly in the income statement. The contingent purchase price is reported in the consolidated accounts at fair value through profit or loss. Intra-group receivables and liabilities, revenue and expenses, and unrealised gains and losses that arise from intra-group transactions are eliminated in their entirety in the consolidated financial statements.

Joint ventures

For accounting purposes, joint ventures are entities over which the Group has joint controlling influence through contractual arrangements with one or several parties and has a right to the net assets.

In the consolidated accounts, joint venture holdings are consolidated in accordance with the equity method, under which the asset is initially reported at acquisition value. The carrying value is subsequently increased or decreased to reflect the owner company’s profit share in the investment after the acquisition date. Tax reported for shares and participations in joint ventures is the capital gain that will accrue when the shares and participations are redeemed. “Share of profit from joint ventures” is reported net after tax. Changes attributable to exchange differences are reported in ”Other comprehensive income”.

7. Segment reporting

An operating segment is a part of the Group that operates a business from which it can generate revenue and incur expenses and for which independent financial information is available. This information serves as a governance tool and is reviewed on a regular basis by chief operating decision makers to evaluate performance and allocate resources to the segment. Hoist Finance’s chief operating decision maker is the CEO.

As from 1 January 2021, Hoist Finance has established a new operating model with three business lines (Unsecured, Secured and Performing) to reflect the operating model used by the company, which served as the main basis of division. Operations continue to be monitored in the geographic regions, which are comprised of individual countries. The company’s chief operating decision maker is responsible for defining the segment.

See Note 3 "Segment Reporting" for additional information on the operating segments.

8. Foreign currency translation

Functional currency

SEK is the functional currency of the Parent Company and the presentation currency of the Group and the Parent Company. Group companies and branches prepare their accounts in the functional currency of the country in which they operate. For consolidation purposes, all transactions in other currencies are converted into SEK at balance sheet date. All amounts, unless indicated otherwise, are rounded to the nearest million.

Transactions in foreign currency

Transactions in a currency other than the local functional currency are translated at the exchange rate in effect on the transaction date. When such transactions are settled, the exchange rate may deviate from the transaction date rate, in which case a realised exchange difference arises.

Monetary assets and liabilities in foreign currency are also translated to functional currency at the balance sheet date exchange rate, which gives rise to unrealised exchange differences. Both realised and unrealised exchange differences of this type are reported in the consolidated income statement.

Translation of foreign operations’ financial statements

Assets and liabilities in foreign operations, including goodwill and other consolidated surplus and deficit values, are translated from the operation’s functional currency to the Group’s reporting currency at the balance sheet date exchange rate. Revenues and expenses are translated at the yearly average rate, which serves as an approximation of the rate that was applied on each transaction date.

Translation differences from subsidiaries arise because the balance sheet date exchange rate changes each period and because the average rate deviates from the balance sheet date exchange rate. Translation differences are reported in ”Other comprehensive income” as a separate component of equity. Information on the most important exchange rates is presented in Note 2 "Exchange Rates".

9. Financial assets and liabilities

Recognition in and derecognition from the balance sheet

A financial asset or liability is recognised in the balance sheet when the company becomes a party to the contractual provisions of the instrument. A receivable is recognised in the balance sheet when the counterparty is contractually liable to pay, even if an invoice has not been sent. Loan receivables, deposits, issued securities and subordinated debt are recognised in the balance sheet at the settlement date. A spot purchase or sale of financial assets is recognised in and derecognised from the statement of financial position on the trade date. A financial asset is derecognised from the balance sheet when the contractual right to receive cash flows from the financial asset expires or when the financial asset is transferred and the company simultaneously transfers substantially all of the risks and rewards of ownership of the financial asset. A financial liability or portion thereof is derecognised when the obligation is discharged or otherwise extinguished. An exchange between the company and an existing lender, or an existing borrower of debt instruments with essentially different terms and conditions, is recognised as an extinguishment of the old financial liability or asset, respectively, and recognised as a new financial instrument. Financial assets and liabilities are offset and the net amount recognised in the balance sheet only when there is a legal right to offset the amounts and an intention to settle the items net or to concurrently realise the asset and settle the liability.

With regard to “Acquired loan portfolios”, changes in instalment agreements do not comprise grounds for derecognition from the balance sheet or for recognition of modifications of loan receivables.

Debtor instalment agreements are completed on a regular basis for receivables in “Acquired loan portfolios” and in some countries, the instalment agreements are established through legal processes pursuant to insolvency rules. Changes in expected cash flows as a result of instalment agreements have an impact on the portfolios’ amortised cost and are recognised in profit or loss as “Impairment gains and losses”.

Impact on earnings arising from derecognition upon, e.g., the write-off or sale of financial assets valued at amortised costs are reported in the income statement as “Gain/Loss on derecognition of financial assets” within "Net result from financial transactions".

Classification and measurement

Financial instruments are initially recognised at fair value plus transaction costs, with the exception of derivatives and instruments from the “Financial asset at fair value through profit or loss” category, which are recognised at fair value in profit or loss. These are recognised at fair value exclusive of transaction costs. Financial instruments are classified on initial recognition. The classification of a financial asset is based on the underlying reason in the entity’s business model for acquiring the asset and the nature of the contractual cash flows generated by the financial asset. Financial liabilities are classified at amortised cost, except for derivative liabilities, which are classified at fair value through profit or loss. The classification determines how the financial instrument is measured after initial recognition, as described below.

Financial assets and liabilities at fair value through profit or loss

The financial assets recognised by the Group at fair value through profit or loss (FVTPL) are derivatives with positive values where hedge accounting is not applied, as well as “Treasury bills and Treasury bonds” and “Bonds and other securities”. In addition to derivatives, financial assets recognised at FVTPL are managed pursuant to a fair-value-based business model primarily aimed at providing liquidity for the acquisition of loan portfolios. The financial liabilities recognised at FVTPL are derivatives with negative values to which hedge accounting does not apply. Derivatives are initially recognised at fair value at the date the derivative is contracted and are subsequently measured at fair value at the end of each reporting period. Changes in fair value are recognised in the “Net result from financial transactions”.

Fair value measurement

The fair value of financial instruments traded on an active market (level 1) is determined for financial assets based on the current bid price. Assets measured at fair value in the balance sheet and traded on an active market comprise investments in "Treasury bills and Treasury bonds" and "Bonds and other securities". Financial instruments that are not traded on an active market but which can be measured using other valuation methods, with observable market information as input (level 2), are comprised of currency hedges and interest derivatives. In cases where assets and liabilities have conflicting market risks, the mid-price is used to determine fair value. See Note 15 “Financial instruments”.

Financial assets and liabilities recognised at amortised cost

Acquired loan portfolios

”Acquired loan portfolios” are comprised of loan receivables, some of which are credit-impaired receivables acquired at a price significantly below the nominal claim and some of which are performing loans. The portfolios are held within the framework of a business model focused on holding the receivables in order to collect contractual cash flows comprised of principal payments and interest payments on outstanding principal.

Measurement methods

The amortised cost is the amount at which the financial asset or liability was measured at initial recognition, adjusted by amortisation using the effective interest method of any difference between that initial amount and the maturity amount and adjusted for any loss allowance. The effective interest rate is the rate that exactly discounts the expected cash flows (including transaction costs) to the gross carrying amount of financial assets. For purchased performing loan portfolios, the calculation of the effective interest rate does not take into consideration expected credit losses.

When Hoist Finance revises estimates of future cash flows on acquired credit-impaired loans, the carrying amount of the financial asset is adjusted to reflect the new estimate discounted using the effective interest rate determined at initial recognition. Any changes are recognised in profit or loss.

Interest income

Interest income for credit-impaired loans is calculated by applying the credit-adjusted effective interest rate to the loan’s carrying value. For performing loans, interest income is calculated as the effective interest rate times the loan’s gross value before loss allowance, except for stage 3, where the effective interest rate is applied to the net carrying amount.


Hoist Finance assesses on a forward-looking basis the expected credit losses (ECL) associated with its debt instrument assets carried at amortised cost. Loss allowances for ECL are recognised at each reporting date, where the measurement of ECL reflects:

  • An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes.
  • Reasonable and supportable information on current and future macroeconomic and non-macroeconomic conditions.

For acquired performing loans, IFRS 9 outlines a model for impairment based on the changes in credit quality since initial recognition, as summarised below:

  • All financial assets that are not credit-impaired at initial recognition are classified as stage 1 and Hoist Finance continuously monitors their credit risk.
  • Stage 2 financial assets are those which have experienced a trigger event for a significant increase in credit risk but are not yet deemed to be credit-impaired. Note 33 ”Risk Management” describes the criteria for the triggers for a significant increase in credit risk.
  • Stage 3 financial assets are those which are credit-impaired. Note 33 ”Risk management” describes the criteria for a financial asset to be considered credit-impaired or in default.

Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of lifetime expected credit losses that result from default events in the next 12 months. Instruments in Stage 2 and 3 have their ECL measured based on expected credit losses on a lifetime basis. The ECL modelling techniques utilised by Hoist Finance are described in the notes.


For acquired loan portfolios, Hoist Finance will, in whole or in part, derecognise assets where there is no reasonable expectation of recovery. Indicators of when there is no reasonable expectation of recovery include: (i) ceasing of enforcement activities; (ii) realisation of collateral;
(iii) days past due and days since last payment was received (not used in isolation); and (iv) sudden change of debtor status indicating inability to meet any portion of its contractual obligations.

Unidentified revenue and payments

The Group receives large volumes of payments from debtors on its own behalf and on behalf of Group customers. In cases where the sender’s reference information is missing or incorrect, it is difficult to assign the payment to the correct account. Payments are also sometimes received on closed accounts. In such instances, a reasonable search is conducted and an attempt is made to contact the payment sender. Unidentified payments are treated as “other liabilities”. The amounts are recognised as revenue in accordance within a predefined time frame.

Other financial assets at amortised cost

Other financial assets at amortised cost encompasses “Lending to credit institutions”, as well as accounts receivable and other financial assets reported under “Other assets” (excluding derivatives with positive values). The assets are held within the framework of a business model with the objective of holding assets to collect contractual cash flows comprising repayments of capital and interest on the capital outstanding. On initial recognition, accounts receivable are recognised at the transaction price and other financial assets are recognised at fair value exclusive of transaction costs. Thereafter, the effective interest method is used to measure amortised cost. The items provide the basis for the loss allowance for expected credit losses (ECL). The loss allowance for accounts receivable is calculated using the simplified approach. The ECL allowance is prepared on initial recognition and on subsequent balance sheet dates, and takes into consideration the remaining term of the receivable.

The loss allowance for “Lending to credit institutions” and other financial assets is based on allocation of the assets in three different stages that reflect changes in credit risk. On initial recognition, the asset is allocated to Stage 1 and, on initial recognition and on subsequent balance sheet dates, a loss allowance is reported for the next 12 months. If the credit risk for the financial asset has increased significantly since initial recognition, the asset is allocated to Stage 2 and the loss allowance is calculated for the entire remainder of the term. Interest income under the effective interest method for financial assets in Stages 1 and 2 is calculated on the gross carrying amount. While a loss allowance continues to be calculated for the entire remainder of the term for Stage 3 credit-impaired assets, interest income according to the effective interest method is calculated on the amortised cost, i.e., after taking into account the loss allowance. Should the credit risk decline, the asset can once again be allocated to Stages 1 or 2. The allocation criteria for the various stages are determined by the Group.

The recognised balance sheet items comprise the net of gross amounts and the loss allowance. Consequently, no separate provision for the loss allowance is reported in the balance sheet. Changes in the loss allowance are recognised under “Impairment gains and losses” in profit or loss.

Seized assets

Seized assets are assets taken over to protect a claim. Hoist Finance may waive a loan receivable and instead seize the asset that served as collateral for the loan. Seized assets may consist of financial assets, properties and other tangible assets. Seized asset are recognised on the same line item in the balance sheet as similar assets that have been acquired otherwise. Seized assets comprised of tangible assets are measured as inventories in accordance with IAS 2. At initial recognition seized assets are measured at fair value. The fair value at initial recognition becomes the acquisition value or amortised cost, depending on what is applicable. Subsequently seized assets are measured according to type of asset, with the exception of impairment on tangible seized assets which is reported as ”Gains/losses from tangible and intangible assets” rather than as ”Depreciation and amortisation of tangible and intangible assets”. The purpose is to better reflect the similar character of impairment of assets that are taken over to protect claims on counterparties and credit losses.

Financial liabilities

The Group’s financial liabilities are comprised of ”Debt securities issued”, ”Subordinated debts” and other financial liabilities. Financial liabilities are initially recognised at fair value, including transaction costs directly attributable to the acquisition or issue of the debt instrument. Subsequent to acquisition, they are recognised at amortised cost pursuant to the effective interest method. Financial liabilities valued at fair value through profit or loss include such financial liabilities held for trading (derivatives).

Modification of financial assets and liabilities

For acquired loans and financial liabilities, Hoist Finance does on occasion renegotiate or otherwise modify a loan’s contractual cash flows. When this happens, Hoist Finance assesses whether or not the new terms are substantially different from the original terms. In doing so, Hoist Finance considers factors including:

  • Change in interest rate or the denomination of the currency of the loan
  • Extension of the loan term or changes in payment plan
  • Schedule insertion of collateral or other security or credit enhancements that affect the credit risk associated with the loan.

If the terms are substantially different, Hoist Finance derecognises the original financial asset/liability and recognises a new asset/liability at fair value according to the new contractual terms, and recalculates a new effective interest rate. The difference in gross carrying amount is recognised in "Derecognition gains and losses".

If the terms are deemed as not substantially different the modification does not result in derecognition, and Hoist Finance recalculates the gross carrying amount based on the revised cash flows of the financial asset/liability and recognises a modification gain or loss in profit or loss in “Net result from financial transactions”. The new gross carrying amount is recalculated by discounting the modified cash flows at the original effective interest rate determined by Hoist Finance at initial recognition.

A modification of contractual cash flows for acquired loans is considered a default trigger if the modification reduces the financial obligation towards Hoist Finance by more than 1 per cent. This implies that these loans will be considered credit-impaired and consequently classified in Stage 3 where loss allowance is recognised on a lifetime basis.

10. Hedge accounting

The Group applies hedge accounting in accordance with IAS 39.

Derivatives are used to hedge (for the purpose of neutralising) any risk of interest-rate and exchange-rate exposures for the Parent Company or the Group. The Group applies hedge accounting in cases where currency derivatives or foreign currency debts are used to hedge net investments in foreign operations. When hedge accounting is used for foreign net investments and the hedge has proven 80–125 per cent effective, changes in the hedging instrument’s fair value are recognised in “Other comprehensive income” and accrued (as are the translation effects of net investments) in the translation reserve. In cases where the hedge is ineffective that part is recognised in the income statement in the item “Net result from financial transactions”. For other derivatives to which hedge accounting does not apply, changes are recognised in fair value under the item “Net result from financial transactions”.

For qualitative information on the Group’s management of market risk, see note 33 “Risk management”. Quantitative information on the Group’s derivative instruments for hedging purposes in presented in Note 16 “Derivatives”.

11. Leasing

Contracts that are deemed as at their start date to transfer right-of-use for an identified asset for a specified period in exchange for consideration are reported as lease contracts by Hoist Finance. The Group applies the exceptions allowed under the standard for intangible assets, short-term leases and lease contracts with low-value underlying assets. These lease contracts are reported as other expenses.

Lease contracts that include both a lease component and associated non-lease components are accounted for separately if an observable stand-alone price is available; otherwise, non-lease components are not accounted for separately but rather reported as a single leasing component.

At a lease contract’s start date, a right-of-use asset and a lease liabil- ity are reported in the balance sheet. The lease liability is initially valued at the present value of remaining leasing fees at the start of the lease contract. After initial recognition, the lease liability is valued at amortised cost pursuant to the effective interest method. Lease payments are allocated between interest and amortisation of the outstanding liability. Interest is allocated over the lease period so that every accounting period is charged with an amount corresponding to a fixed interest rate for the liability recognised during the respective period. Right-of-use is initially valued at an amount corresponding to the lease liability’s original value plus any prepaid leasing fees or initial direct costs, and is then written off on a straight-line basis over its useful life. The carrying value of the right-of-use asset is adjusted for any revaluations of the lease liability.

Lease contracts may include provisions for extending or terminating agreements included in the lease period only if it is deemed to be reasonably certain that such provisions will be exercised. The lease liability is revalued to reflect the new assessment of the lease period.

Lease contracts in the Hoist Group are classified in the following categories:

  • Equipment and furniture
  • Office premises
  • Vehicles
  • IT hardware

The majority of lease contracts are leases of office premises for the company’s normal business operations.

12. Intangible assets

Intangible assets are identifiable, non-monetary assets that lack physical substance and are under Hoist Finance’s control.

Capitalised expenses for IT development

Expenditures for IT development and maintenance are generally expensed as incurred. Expenditures for software development that can be attributed to identifiable assets that are under the Group’s control and that have anticipated future economic benefits are capitalised and reported as intangible assets.

Additional costs for previously developed software, etc. are reported as assets in the consolidated balance sheet if they increase the anticipated future economic benefits of the specific asset to which they are attributable – e.g., by improving or extending a computer programme’s functionality beyond its original use and estimated useful life.

IT development costs reported as intangible assets are amortised using the straight-line method over their useful lives, though not more than seven years. The asset is reported at cost less accumulated amortisation and impairment losses. Costs associated with the maintenance of existing computer software are continuously expensed as incurred.

For capitalisation of self-generated development expenditures, the corresponding amount is transferred from unrestricted equity to restricted equity in the Parent Company.

If work is done to configure and customise a system held via a cloud-based solution (Software as a Service, SaaS), an assessment is made of the extent to which these expenses can be considered an independent immaterial asset or whether they should be taken up as an expense when the service is received. If the service is provided by the supplier of the cloud-based solution, it must be determined whether or not the service is distinct from the software. If not distinct, the expenses are accrued over the term of the software agreement.


When the purchase price, any non-controlling interest and fair value at the acquisition date of previous shareholdings exceed the fair value of identifiable net assets acquired, the excess amount is reported as goodwill. Goodwill from acquisitions of subsidiaries is reported as intangible assets.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Allocation is made to the cash-generating units, or groups of cash-generating units, determined in accordance with the Group’s operating segments that are expected to benefit from the business combination in which the goodwill arose.

Goodwill is tested annually, or more often if so indicated, to identify any impairment requirements and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Profit or loss on disposal of an entity includes the remaining carrying value of goodwill relating to the entity sold.

Other intangible assets

Other intangible assets are amortised on a straight-line basis over their useful lives, but not over a longer period than five years.


An impairment test is conducted upon indication of depreciation in value, or at least annually when each asset’s residual value and remaining useful life are determined.

The recoverable value of the asset is estimated if there are indications of an impairment requirement. For goodwill and other intangible assets with indeterminate useful lives and for intangible assets that have not yet come into use, recoverable values are calculated on an annual basis. If independent cash flows cannot be determined for individual assets, the assets are grouped at the lowest level at which independent cash flows can be identified – a cash-generating unit.

An impairment is reported when the carrying value of an asset or a cash-generating unit exceeds its recoverable value. Impairments are reported in the income statement. Impairments attributable to a cash-generating unit are primarily allocated to goodwill and are subsequently distributed proportionally among other assets in the unit.

The recoverable value for cash-generating units is the fair value less divestment costs or the useful value, whichever is greater. Useful value is calculated by discounting future cash flows using a discounting factor that takes into account the risk-free interest rate and the risk associated with that particular asset.

Goodwill impairment is not reversed. Impairment of other assets is reversed if there have been changes in the underlying assumptions that were used to determine recoverable value. Impairments are reversed only to the extent that the carrying value of the assets following the reversal does not exceed the carrying value of the assets if the impairment had not been reported.

13. Tangible assets

Tangible assets are comprised of IT equipment, improvements to leased premises, and equipment.

Tangible assets are reported as assets in the balance sheet if it is likely that the future economic benefits will accrue to the company and the cost of the asset can be reliably estimated. Tangible assets are reported at cost less accumulated depreciation and impairments.

Principles for depreciation/amortisation of assets

Assets are depreciated/amortised using the straight-line method over e»stimated useful life and applying the following periods:

  • Equipment 2-5 years
  • Investments in leased premises 5 years
  • Intangible assets 3–7 years

14. Provisions

Provisions are recognised for existing legal or informal obligations arising from past events where it is probable that a transfer of economic benefit will be necessary to settle the obligation. The amount must be able to be reliably estimated in order to for recognition to occur. The provision is measured at the amount corresponding to the best estimate of the expenditure required to settle the obligation at the balance sheet date.

The expected future date of the settlement is taken into account in the estimate.

15. Income and expenses

Interest income

Interest income encompasses interest income according to the effective interest method from “Acquired loan portfolios”, from “Lending to credit institutions” and investments in “Treasury bills and Treasury bonds” and “Bonds and other securities”. 

Interest income pertaining to credit-impaired assets is based on the initial credit-adjusted effective interest rate and the portfolio’s amortised cost at the start of the period. Interest income pertaining to other financial instruments is based on the initial effective interest rate and the instrument’s gross value at the start of the period. However, if an asset has been credit-impaired, the interest income is calculated on the amortised cost – i.e., the net of the gross value and the ECL loss allowance.

Interest expense

Interest expense is mainly comprised of expenses associated with the Group’s funding via deposits from the public and issued debt instruments.

Impairment gains and losses

The earnings item comprises loss allowance changes pertaining to “Acquired loan portfolios”. Where applicable, modification gains/losses attributable to “Acquired loan portfolios” are included. The item also encompasses a loss allowance for other financial assets recognised at amortised cost. Both positive and negative remeasurements can be recognised under this item. If no reasonable expectation exists of recovering the remaining receivables in a portfolio, an impairment loss is recognised and the carrying amount of the asset is derecognised from the balance sheet.

“Impairment gains and losses” also includes the net of actual and projected collections.

Fee and commission income

Companies in the Hoist Finance Group provide collection services for third parties. In such agreements the counterparty selects the receivables to be included in the contract and transfers those to the Group, while retaining ownership of the receivables. In such contracts the Group is generally entitled to remuneration corresponding to a fixed percentage of successful collections. The Group may also be entitled to bonus payments in the event collections during a specific period reach a certain level. A contract may also include a cancellation fee.

The Group reports "Fee and commission income" in accordance with IFRS 15. Income is recognised when the performance obligation has been fulfilled and when control is transferred to the customer. Variable payments are recognised as income to the extent it is highly probable that no material provision of previously recognised accumulated income is likely to arise in later periods. For Hoist Finance, services are transferred and income is recognised at a given time, as the services are performed.

Net result from financial transactions

“Net result from financial transactions” includes realised and unrealised exchange rate fluctuations, gains/losses on financial assets and liabilities recognised at FVTPL and the ineffective portion of hedges of foreign net investments. The item may also include modification gains/losses on financial instruments that are unrelated to acquired loan portfolios. Earnings effects that are not recognised as separate earnings items that pertain to financial assets recognised at amortised cost can, when derecognised from the balance sheet and on reclassification, be recognised under “Net result from financial transactions”.

Collection costs

Various types of costs directly related to loan portfolio administration are grouped under “Collection costs”. For the Group, “Collection costs” are mainly direct costs for external and internal collection services.

16. Employee benefits

All forms of remuneration provided to employees as compensation for services rendered constitute employee benefits.

Short-term benefits

Short-term benefits to employees are settled within twelve months following the close of the reporting period during which the services were rendered. Short-term benefits are mainly comprised of fixed and variable salary, both of which are accounted for during the period in which the related services are rendered. Post-employment benefits in Hoist Finance comprise only pensions. Benefits that are not expected to be fully settled within twelve months are reported as long-term benefits.

A provision is reported for the expected cost of profit share and bonus payments when the Group has valid legal or constructive obligation to make such payments due to services rendered by employees and when the obligation can be reliably calculated.

Redundancy payments

Remuneration expense in connection with termination of personnel is reported either when the company is no longer able to withdraw the redundancy offer or when the company reports restructuring costs, whichever occurs sooner. Payments that are expected to be settled after twelve months are reported at present value.


Group companies operate various pension schemes, which are generally funded through payments determined by periodic actuarial calculations to insurance companies or trustee-administered funds. The Group has both defined benefit and defined contribution plans:

  • Defined benefit plans normally specify the pension rate to be received by the employee upon retirement, usually dependent on one or several factors, such as age, years of service and salary.
  • Under defined contribution plans, the Group pays fixed contributions into a separate entity. The Group has no legal or informal obligation to pay further contributions if the fund does not hold sufficient assets to pay all benefits to employees relating to employee service during the current and prior periods.

The liability reported in the consolidated balance sheet with respect to defined benefit pension plans is the present value of the defined benefit obligation as at the balance sheet date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The net present value of the defined benefit obligation is determined by discounting estimated future cash flows using interest rates of high-quality corporate bonds denominated in the currency in which the benefits will be paid and with durations approximating the durations of the related pension liability.

Net interest expense/income for the defined benefit pension obligation/asset is reported in “Net interest income”. Net interest income is based on the discount rate used in calculating the net obligation – i.e., the interest on the obligation, plan assets and interest on effects of any asset restrictions. Other components are recognised in net operating income.

Revaluation effects are comprised of actuarial gains and losses, discrepancies between actual return on plan assets and the amount included in net interest income, and any changes to effects of asset restrictions (exclusive of interest included in net interest income).

Revaluation effects are reported in ”Other comprehensive income”.

Changes or reductions to defined benefit plans are reported at the earlier of the following:

  • When the change to or reduction in the plan occurs, or
  • When the company reports the associated restructuring costs and redundancy costs changes/reductions are reported.

Changes/reductions are reported directly as personnel expenses in the profit and loss accounts. The special employer’s contribution is included in the actuarial assumptions and is reported as part of the net obligation/asset.

Tax on returns from pension funds is reported in profit or loss for the period the tax relates to, and is thus not included in the liability projection. For funded pension plans, the tax is charged to ”Return on plan assets” and is reported in ”Other comprehensive income”. For unfunded or partially unfunded plans, the tax is charged to ”Net profit for the year”.

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are reported as employee benefit expense when they fall due. Prepaid contributions are reported as an asset to the extent that a cash refund or a reduction in the future payments is available.

Share-based payment arrangement

A long-term incentive plan (LTIP) enables the Executive Management team to acquire shares in the company. The fair value of the granted options is recognised as a personnel expense, with a corresponding increase in equity. Fair value is calculated at grant date and distributed over the vesting period. The fair value of the granted options is calculated and takes into account market conditions, conditions that are not vesting conditions, and applicable conditions on grant date. The cost recognised corresponds to the fair value of the estimated number of options expected to be vested, taking into account service and performance conditions that are not market conditions. The cost is adjusted in subsequent periods to ultimately reflect the actual number of vested options, although no adjustment is made when forfeiture is based solely on non-fulfilment of market conditions and/or conditions that are not vesting conditions.

Social fees attributable to share-based instruments granted to employees as remuneration for purchased services are expensed over the period during which services are rendered. The provision for social fees is based on the options’ fair value at the reporting date.

For additional details, see Note 9 ”Personnel expenses”.

17. Taxes

Taxes are comprised of current tax and deferred tax. Taxes are reported through profit or loss unless the underlying transaction is directly reported in ”Equity” or in ”Other comprehensive income”, in which case the attributable tax effect is also reported in ”Equity” or ”Other comprehensive income”, respectively.

Current tax refers to tax paid or received for the current year, using tax rates that apply as at the balance sheet date, including adjustments for current tax attributable to previous periods.

Deferred tax is calculated in accordance with the balance sheet method based on temporary differences between the carrying value of assets and liabilities and their value for tax purposes. The following temporary differences are not taken into account:

  • Temporary differences that arise in the initial recognition of goodwill. The initial recognition of assets and liabilities in a transaction other than a business combination and which, at the time of the transaction, does not affect either the reported or taxable profit.
  • Temporary differences attributable to participations in subsidiaries and associated companies that are not expected to be reversed within the foreseeable future

The measurement of deferred tax is based on how the carrying values of assets or liabilities are expected to be realised or settled. Deferred tax is calculated by applying the tax rates and tax rules that have been set or essentially set as of the balance sheet date.

Deferred tax assets from deductible temporary differences and tax losses carry-forwards are only recognised if it is likely that they will be utilised within the foreseeable future. The value of deferred tax assets is reduced when they are utilised or when it is no longer deemed likely that they will be utilised. Current tax, deferred tax, and tax attributable to the previous year are reported under ”Income tax expense”.

18. Earnings per share

Basic earnings per share are calculated by dividing net profit for the year attributable to Hoist Finance AB (publ) shareholders, adjusted for interest on capital instruments recorded in equity, by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share are determined by adjusting the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, consisting of rights to performance shares in the long-term incentive programmes.

Potential ordinary shares are only considered to be dilutive on the balance sheet date if a conversion to ordinary shares would reduce the earnings per share. The rights are further considered dilutive only when the exercise price, plus future services, is lower than the period’s average share price and the vesting requirements for the warrant programme have been met.

19. Equity

When a financial instrument is issued in the Group it is reported as a financial liability or as an equity instrument, in accordance with the financial implications of the instrument’s terms. These instruments or sections thereof are reported as liabilities when the company has an irrevocable obligation to pay cash. Issued financial instruments that do not irrevocably oblige the company to pay cash on interest and nominal amounts are reported as equity.

Return to investors is reported as a dividend to equity with respect to equity instruments and as an interest expense in profit or loss with respect to debt instruments.


Proposed dividends are reported as a liability after having been approved by the Annual General Meeting.

20. Related-party transactions

Hoist Finance defines related parties as:

  • Shareholders with significant influence
  • Group companies and joint ventures
  • Key senior management
  • Other related parties

All intra-group transactions between legal entities and transactions with other related parties are conducted pursuant to the arm’s length principle in accordance with OECD requirements. Intra-group transactions are eliminated in the consolidated accounts.

Shareholders with significant influence

Shareholders with significant influence are entitled to take part in decisions on Hoist Finance’s financial and operational strategies, but do not have controlling influence over such strategies.

Group companies and joint ventures

A company is defined as a related party if the company and its reporting entity are part of the Hoist Finance Group.

See section 6 "Consolidation", for the definition of “subsidiaries and joint ventures”. Further information on Hoist Finance Group companies is presented in Note 19 ”Group companies”.

Key senior management

Key senior executives include:

  • the Board of Directors
  • the Chief Executive Officer (CEO)
  • the Executive Management Team

See Note 9 “Personnel Expenses” for details on compensation, pensions and other transactions with key senior executives.

Other related parties

Other related parties comprise close relatives and family members of key senior management, if that or those person(s) has or have controlling influence, severally or jointly, over the reporting entity.

Other related parties are also companies over which Hoist Finance Group key management personnel, or their close relatives, have significant influence.

Information on transactions between Hoist Finance and other related parties is presented in Note 35 ”Related-party transactions”.

21. Cash flow statement

The cash flow statement includes changes in the balance of cash and cash equivalents. The Group’s cash and cash equivalents is comprised of cash, treasury bills exposed to an insignificant risk of value fluctuations, and non-restricted lending to credit institutions. Cash flow is divided into cash flow from operating activities, investment activities and financing activities. The indirect method is used to report cash flow.

Cash flow from investing activities includes only actual disbursements for investments made during the year.

Foreign subsidiaries’ transactions are translated in the cash flow statement at the average exchange rate for the period. Acquired and divested subsidiaries are reported as ”Cash flow from investing activities, net”, after deducting cash and cash equivalents in the acquired or divested company. For acquired and divested subsidiaries that hold debt portfolios, acquired and divested loan portfolios are reported in ”Operating activities”.

22. Parent Company accounting principles

The Parent Company’s financial statements have been prepared in accordance with the Swedish Annual Accounts Act for credit institutions and securities companies (1995:1559) and the regulatory code issued by the Swedish Financial Supervisory Authority on Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25), including applicable amendments. The Swedish Financial Board’s RFR 2 “Accounting for legal entities” requires the Parent Company to use the same accounting principles as the Group (i.e., IFRS) to the extent allowed by Swedish accounting legislation. However, the exception in RFR 2 is applied with respect to guarantee agreements benefiting subsidiaries and leases.

Mergers are accounted for in accordance with BFNAR 1999:1. The differences between the Group’s and the Parent Company’s accounting principles are stated below.

The headings in the financial statements follow the Annual Accounts Act for Credit Institutions and Securities Companies and the Swedish Financial Supervisory Authority’s regulations, and therefore differ in certain cases from headings in the Group’s accounts.

22.1 Change in accounting principles

Unless otherwise indicated below, the Parent Company’s accounting principles have changed in accordance what is specified above for the Group.

As regards equity in the balance sheet, Hoist Finance has accounted separately for additional Tier 1 capital and has moved shareholders’ contributions from other contributed capital to retained earnings in order to improve transparency in the Parent accounts. Comparative figures have been restated.

22.2 Group contributions and dividends

Group contributions

Hoist Finance applies the main rule in RFR 2 IAS 27.2. Group contributions received from Group companies are reported in the income statement. The net of Group contributions paid or received for optimising the Group’s tax expense is reported as appropriation in the Parent Company. Group contributions from the Parent Company to subsidiaries are reported as an increase in participations in Group companies, net of tax.


Dividends paid to Hoist Finance AB (publ) shareholders are reported as a liability following the approval of the Annual General Meeting. Dividends from subsidiaries and associated companies are reported as ”Dividends received”.

22.3 Subsidiaries

Parent Company shareholdings and participations in Group companies are reported based on cost of acquisition. Holdings are carried at cost and only dividends are reported in the income statement. Impairment tests are conducted in accordance with IAS 36 “Impairment of assets” and write-downs are made when permanent decline in value is established.

Transaction costs are included in the carrying value of the holding in the subsidiary.

Transaction costs attributable to subsidiaries are reported directly in profit or loss in the consolidated accounts when incurred.

Contingent purchase prices are valued based on probability of payment. Any changes to the provision/receivable are added to/reduced from the cost of acquisition.

22.4 Revaluation reserve

Revaluation reserve rules also apply to financial assets classified as purchased or issued credit-impaired loans. If the Parent Company makes a new assessment that leads to an upward revision of future cash flow compared with the cash flow that formed the basis of the calculation of the effective interest rate at the time of acquisition, it must report these revaluations in a revaluation reserve for restricted equity. The transfer therefore has an effect on distributable funds, until upward adjustments to cash flows are realised or reduced and amounts in the revaluation reserve are reversed. Revaluations and their reversals have no effect on earnings. In the Parent Company, the present value of the upwardly adjusted portion of future cash flows are reported in the revaluation reserve, with respect to acquired unsecured credit-impaired loans pursuant to collective valuation. Revaluation may also be done for other non-current assets with a permanent value that significantly exceeds the carrying amount.

22.5 Development expenditure fund

Capitalisation of self-generated development expenditures is limited by the option of distributing capital. The amount corresponding to capitalised self-generated development expenditure is transferred from retained earnings to a special restricted fund. The fund is reduced in the event of amortisation, impairment or divestment.

22.6 Untaxed reserves

In the Parent Company, untaxed reserves are reported as a separate item in the balance sheet. In the consolidated financial statements, untaxed reserves are divided into a ‘deferred tax liability’ component and an ‘equity’ component.

22.7 Financial instruments

The Parent Company applies the RFR 2 exception with respect to guarantee agreements benefiting subsidiaries.

The Parent Company’s financial assets are classified at amortised cost and are subject to a loss allowance. The calculated credit loss in the Parent Company is not significant and no loss allowance is presented.

22.8 Hedge accounting

The Parent Company applies hedge accounting to the fair value of participations in foreign subsidiaries as well as participations in the Polish joint venture. In hedge accounting, exchange rates influence the carrying value of shares and participations in subsidiaries and shares and participations in joint ventures. This change in value is reported in “Net result from financial transactions”, as is the change in value of hedging instruments. Hedge accounting thus shows a net effect in “Net result from financial transactions” compared with previous reports, when reported changes in value of hedging instruments did not correspond to any reported changes in value of participations in subsidiaries or joint ventures.

22.9 Leasing

The Parent Company reports leasing fees as costs on a straight-line basis over the lease period.

22.10 Pensions

The Parent Company calculatesd imputed pension costs in accordance with the Pension Obligations Vesting Act and Financial Supervisory Authority regulations. As compared with the Group, this primarily involves differences regarding determination of the discount rate and the calculation of future obligations, which does not take assumptions about future salary increases into account. The reported net cost for pensions is calculated as the sum of pensions paid and pension premiums.

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- Annual Report 2021 -
- Årsredovisning 2021 -