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DDM Holding AG
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DDM Debt AB
DDM Debt AB: Q1 2018 report
Significant investment in the Balkans and RCF extended
Highlights first quarter 2018
- Significant investment in the Balkans of about EUR 30M, with an additional investment of about EUR 10M pending regulatory approval expected in the coming months
- Super senior revolving credit facility of EUR 17M extended for a further six months until 28 September
- Kent Hansson, founder of the DDM Group and member of the Board of Directors appointed as CEO
- New Chief Investment Officer, Alessandro Pappalardo, appointed as a member of the Executive Management Committee of the DDM Group
- Net collections increased by 75% to EUR 10.5M (Q1 2017: EUR 6.0M)
- Cash EBITDA increased by 82% to EUR 8.9M (Q1 2017: EUR 4.9M)
- Net profit for the period of EUR 0.9M (Q1 2017: profit of EUR 0.5M)
Significant events after the end of the quarter
- New Head of Business Development, Henrik Wennerholm, appointed as a member of the Executive Management Committee of the DDM Group
Comment by the CEO
In the first quarter of 2018 we built on the positive momentum from 2017, and continued our rapid expansion. In March we invested about EUR 30M in a significant portfolio containing secured corporate receivables in the Balkans. About 90% of the portfolio value is located in Slovenia and Croatia, and this transaction also includes receivables in Bosnia & Herzegovina and Montenegro, among others. Entering these markets delivers on our growth strategy and demonstrates our flexibility and solid industry experience. This transaction also rebalanced the composition of the DDM Debt Group’s portfolio, resulting in Croatia being our largest market at the end of March, amounting to 30% of our overall book value of distressed asset portfolios, followed by Greece and Slovenia representing 28% and 19% respectively. An additional investment of about EUR 10M in the Balkans portfolio is pending regulatory approval, which is expected in the coming months.
During the quarter we also strengthened the management team, with Alessandro Pappalardo appointed as Chief Investment Officer and a member of the DDM Group’s Executive Management Committee in February. Mr. Pappalardo has extensive industry experience, including from Goldman Sachs as well as Intrum Justitia, where he served as Chief Investment Officer on the Group Management Team. Kent Hansson, founder of the DDM Group and member of the Board of Directors was also appointed as CEO in February. After the end of the quarter, Henrik Wennerholm was appointed as Head of Business Development and a member of the DDM Group’s Executive Management Committee. Mr. Wennerholm also has extensive industry experience from companies such as Hoist, Aktiv Kapital (PRA Group) and, most recently, B2Holding ASA where he served as Head of Business Development and a member of the Group Executive Management Team. He was also the founding partner and CEO of the Nordic NPL investor and debt recovery specialist Sileo Kapital AB, which was acquired by B2Holding ASA in 2014. The management team is expected to be further strengthened in the coming quarters.
Net collections grew significantly during Q1, increasing 75% compared to Q1 2017. The increase was driven by strong collections from existing portfolios in addition to the acquisition of DDM Treasury’s subsidiaries holding the NPL portfolios on 17 February 2017. Cash EBITDA amounted to EUR 8.9M in the first quarter of 2018, an increase of 82% compared to the corresponding period in 2017, driven by the higher net collections.
In March DDM Debt extended its revolving credit facility of EUR 17M with a Swedish bank for a further six months until 28 September. Our strong operational performance resulted in cash flow from operating activities before working capital changes of EUR 4.9M in the first quarter of 2018, which was in line with Q1 2017 despite a significant increase in interest paid in the quarter compared to the prior year.
Regulatory, accounting and market pressures will continue to drive banks and financial institutions around Europe to improve their balance sheets through disposing of their non-performing assets. In this environment, we believe that there will continue to be plenty of good business opportunities for the DDM Debt Group.
However, the DDM Debt Group’s rate of growth and financial results will continue to vary from quarter to quarter, impacted by the timing of significant investments. As we primarily target larger portfolios and they generally take longer to complete, this potentially results in positive one-off effects during the quarter the portfolio is acquired.
We aim to deliver sizeable and profitable growth in 2018 as we continue to focus on our markets in SEE and CEE where we have strong market knowledge and relationships.
DDM Debt AB (publ) intends to publish financial information on the following dates:
Interim report for January – June 2018: 31 July 2018
Interim report for January – September 2018: 8 November 2018
Q4 and full year report 2018: February 2019
This report has not been reviewed by the Company’s auditors.
Acting CEO Kent Hansson and CFO Fredrik Olsson will comment on the DDM Group’s results during a conference call on 3 May 2018, 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 8 503 365 64, CH: +41 225 675 548 or UK: +44 203 008 9803.
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 May 2018 at 08:00 CET.