August 24 (SeeNews) - Norwegian debt solutions provider B2Holding, which is divesting its Bulgarian subsidiary Debt Collection Agency (DCA), said that it saw a 37% annual decline in net revenues in its Southeast Europe (SEE) segment in the second quarter of 2022.
B2Holding's revenues in SEE in the review period amounted to 69 million Norwegian crowns ($7.1 million/7.15 million euro), the company said in an interim financial report on Tuesday. This contrasted with an annual increase of 14% in the first quarter.
Adjusted operating profit in B2Holding's SEE segment, which includes Romania, Bulgaria, Greece and Cyprus, declined to 24 million crowns from 32 million crowns a year earlier and 37 million crowns in the first quarter of this year.
Last week, the Norwegian company announced that it will divest DCA to an unnamed Bulgarian special purpose vehicle for 48.4 million euro ($48 million). The deal, which is set to close in October, will enable the vendor to focus more on core markets in the Nordics and Poland.
The disposal will reduce B2Holding's net revenue by 32 million crowns and triggered a second-quarter non-cash impairment mainly related to goodwill. The net impact on profit after tax was 105 million crowns.
"Unsecured assets are the dominant asset class in Bulgaria and the strategic fit with the other countries included in the ring-fenced structure is limited," B2Holding chief executive Erik Just Johnsen said in the interim report.
In February, the company announced a senior financing deal with a company advised by US asset manager Pacific Investment Management Company (PIMCO), with most portfolios from CEE and SEE, Italy and France to be included in the structure.
Over the past quarter, B2Holding separated asset ownership from servicing and created a new cross-border master servicer, Veraltis Asset Management.
"Bulgaria mainly had unsecured portfolios and in the area here for Veraltis, there is mainly secured portfolios. We closed now the PIMCO deal, very important for us also for the future," Johnsen said in an earnings presentation on Tuesday.
The cost-to-collect in Bulgaria is also high, exceeding 30%, while B2Holding is able to redeploy capital with a marginal cost-to-collect in the single digits in its unsecured business, CFO Andre Adolfsen said according to the presentation transcript.
"If you look at Croatia, Slovenia and Serbia, we have a good position still. We have very large investments still in those countries. And I would say that we are number one in those countries," Johnsen added.
Oslo-based B2Holding operates in twenty-two countries in Europe, among which Bosnia and Herzegovina, Croatia, Montenegro, Serbia and Slovenia.
(1 Norwegian crown = 0.1037 euro)