Definitions

Debt purchasing and debt servicing is a specialised industry with some industry-specific terminology and abbreviations. 

Below are some of the most used terms listed and defined. 

Alternative performance measures used in financial reports are defined in the applicable report and presentation. 

Cost to collect (CtC)

Actual variable and fixed costs related to the collection or recovery of assets. 

Cash EBITDA

Gross cash collection minus all collection and administration cost

EBITDA

Earnings before interest, taxes, depreciation, and amortization

Factoring

Financing of receivables through an arrangement between a financial institution and a client (company), where the client gets advances from the financial institution in return for receivables 

Forward flow agreement

Agreements where the Group agrees with the portfolio provider that it will, over some period in fixed intervals, transfer its non-performing loans of certain characteristics to the Group

Gross cash collection

The actual cash collected from purchased portfolios before related costs

ERC

Estimated remaining collections (ERC) expresses the gross cash collection in nominal values expected to be collected in the future from the purchased loan portfolios owned at the reporting date and the Group’s share of gross cash collection on portfolios purchased and held in joint ventures. ERC includes ERR. The Total ERC is a common measure in the debt purchasing industry; however, it may be calculated differently by other companies and may not be comparable

ERR

Estimated remaining recoveries (ERR) expresses the gross cash collection in nominal values expected to be recovered in the future from the purchased secured loan portfolios owned at the reporting date and the Group’s share of gross cash collection on secured portfolio purchased and held in joint ventures

FV

Face value (book value); the unpaid principal balance (UPB) plus interest and fees

CF

Cash flow

Net CF

Net cash flow; Cash flow less collection cost

IRR

Internal rate of return; The zero-NPV generating interest rate

ARM

Accounts receivables management

NPL

Non-performing loan: When a debtor has not made his/her scheduled payments for at least 90 days, the loan is defined as a non-performing loan (NPL)

IVA

Individual voluntary arrangement

LTV

Loan to value ratio

CMS

Credit management services

EPS

Earnings per share

FTEs

Full-time equivalent: The number of employees in the Group, recalculated to full-time positions

Portfolio

A portfolio an the investment in secured (with collateral) and/or unsecured (without collateral) loan portfolios. 

Single ticket

A large individual claim, usually a secured loan.

Unsecured loans

Retail (consumer) claims without collateral; Smaller claims, typically consumer loans, credit card debts, etc. Forward flow agreements are usually unsecured. 

Secured loans

Claims secured with collateral; mortgage secured loans, loans secured with corporate real estate, etc. Secured portfolios will typically have a larger average face value per claim and fewer debtors per portfolio.

Third-party servicing

Collection of debt on behalf of others, such as banks and other credit providers.

UPB

Unpaid principal balance