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DDM Holding AG
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DDM Debt AB
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DDM Treasury Sweden AB

3 Aug 2017

DDM Debt AB: Q2 and half year report January - June 2017

Milestone transactions and strong portfolio performance 

Highlights second quarter 2017

  • Acquisitions of two portfolios in Croatia totaling c. EUR 28M
  • Net collections of EUR 9.8M
  • Cash EBITDA of EUR 8.2M
  • Net loss for the period of EUR 0.0M
  • EUR 35M of senior secured bonds were issued in April in a tap issue under the EUR 85M senior secured bond framework at a price of 101.5%, representing a yield to maturity of c. 9%

Highlights six months 2017

  • Net collections of EUR 15.8M
  • Cash EBITDA of EUR 13.1M
  • Net profit for the period of EUR 0.5M
  • DDM Debt acquired DDM Treasury Sweden AB’s subsidiaries holding the portfolios on 17 February
  • EUR 85M of senior secured bonds at 9.5% issued and listed on Nasdaq Stockholm. The bonds are currently trading above par

Significant events after the second quarter

  • Entered Greece through a milestone transaction, with an investment commitment of approximately EUR 50M

Comment by the CEO

I am very happy with the progress made during the past months. In addition to solid second quarter results, DDM Debt has made a number of milestone transactions, entering new geographies with significant amounts invested. This further proves DDM Debt’s operational capabilities, and the scalability and flexibility of the business model. The acquisition in Greece, where DDM Debt’s investment commitment amounts to approximately EUR 50M, is one of the first and largest transactions in the Greek non-performing loan market, and allows us to establish a first mover advantage in the country with the highest non-performing loan ratio in Europe. The underlying portfolio consists of secured and unsecured retail and corporate receivables and has a nominal value of about EUR 1.3BN. The transaction includes one of the very few servicing licenses in Greece, in which we also see great potential for future transactions.

The Company also acquired two portfolios in Croatia totaling c. EUR 28M at the end of the second quarter. These acquisitions are in line with our strategy to grow our investments and to rapidly expand our presence across the region. Following significant due diligence work we are entering Croatia, a new market, which has strong potential for future growth. The acquisitions also increase our exposure to the corporate receivables segment, further diversifying our portfolio of investments in line with our strategy.

The recently announced investments, including commitments, totaling EUR 78M are funded by a combination of cash on hand, following the debt financing activities in first half of the year and the equity raised then contributed by DDM Holding AG, in addition to cash flow from operations and further debt financing.

DDM Debt’s operational strength and growth continued to be demonstrated in the second quarter. The portfolios continued to perform strongly as a result of continued portfolio growth and focus on portfolio management.

Net collections and cash EBITDA in the second quarter of 2017 amounted to EUR 9.8M and EUR 8.2M respectively, driven by significant collections from the Hungarian portfolio, in addition to the continued strong performance of the larger Slovenian acquisition. For the first six months of 2017 net collections and cash EBITDA were EUR 15.8M and EUR 13.1M respectively. The results of the subsidiaries acquired from DDM Treasury Sweden are included in DDM Debt’s results from 17 February.

DDM Debt’s cash flow benefitted from the strong net collections, resulting in cash flow from operating activities before working capital changes of EUR 8.1M for the second quarter and EUR 12.6M for H1 2017.

Market outlook 

We continue to see a very strong pipeline of portfolios currently amounting to about EUR 900M across our region in both existing and new markets, with returns and characteristics that match our investment criteria. We will continue our rapid expansion as we continue to source attractive portfolios given our proven transaction closing capabilities and strong reputation.

With the strong cash flows and recent acquisitions we remain positive on the outlook for DDM Debt and feel confident to be able to continue to deliver according to our strategy.

Financial calendar

DDM Debt AB (publ) intends to publish financial information on the following dates:

Interim report for January – September 2017:   2 November 2017

Q4 and full-year report for January – December 2017:   February 2018

Annual report 2017:   March 2018

This report has not been reviewed by the Company’s auditors.

CEO Gustav Hultgren and CFO Fredrik Olsson will comment on the DDM Group’s results during a conference call on 3 August 2017, starting at 10:00 CET. The presentation can be followed live at www.ddm-group.ch and/or by telephone with dial-in numbers: SE: +46 8 566 426 95, CH: +41 225 675 548 or UK: +44 203 008 9818. 

The information in this interim report requires DDM Debt AB (publ) to publish the information in accordance with the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication on 3 August 2017 at 08:00 CET.