29 Aug 2024

Q2 and half year report January – June 2024

Continued growth in invested assets

Highlights second quarter 2024

• Gross ERC at the end of June 2024 was EUR 314m (280 at December 2023)
• Gross collections amounted to EUR 14.2m (20.3)*
• Net collections amounted to EUR 12.0m (18.4)*
• Cash EBITDA amounted to EUR 6.3m (13.8)*

Highlights six months 2024

• Gross collections amounted to EUR 25.6m (30.3)*
• Net collections amounted to EUR 21.6m (26.4)*
• Cash EBITDA amounted to EUR 11.7m (18.2)*
• Erik Fällström appointed as CEO, replacing Razvan Munteanu

Significant events after the end of the quarter

• DDM welcomes intended merger between Sivers’ Photonics AI unit and byNordic SPAC

* Key financial highlights above include non-IFRS alternative performance measures that represent underlying business performance.

Comment by the CEO

During the second quarter of 2024 we have been working on a number of improvements to the DDM Debt Group platform, and are executing our strategy to build a more valuable and diversified investment company. For the first time in the DDM Debt Group’s history, the book value of our invested assets reached over EUR 200m at 30 June 2024. Our strategy also includes significant efforts towards exiting certain historical assets, and we are confident that these efforts will come into fruition in the second half of 2024 and into early 2025. This will enable the DDM Debt Group to focus on broader investments, diversifying the group’s assets and capitalizing on our competencies.

While our primary focus remains on investing in and managing non-performing loan portfolios, we also actively pursue related and complementary investments. In the second quarter, we secured approval from Swedish authorities for a foreign direct investment to acquire over 10% of the shares in Sivers Semiconductors AB (“Sivers”). Following this approval, we increased our shareholding in Sivers from 7.63% at 31 March 2024 to 11.75% at 30 June 2024.

In August 2024 it was announced that Sivers has entered into a non-binding letter of intent to merge its Photonics AI subsidiary with byNordic Acquisition Corporation, a publicly-traded special purpose acquisition company. The DDM Debt Group currently holds approximately 30% of sponsor shares in byNordic Acquisition Corporation. The DDM Debt Group shares the view that the potential for AI Photonics is immense. With this transaction, we aim to set the stage for Sivers Photonics AI to flourish as a standalone company with access to the U.S. capital markets and institutional investors.

On 1 February 2024 the DDM Debt Group (“DDM”) sold all of its remaining shareholding in Addiko Bank AG (“Addiko”), of approximately 1.34 million shares or approximately 6.87% of all shares in Addiko, to Alta Pay Group d.o.o. (“Alta”), a Serbian bank, for EUR 14.70 per share (the “Shares”). The Serbian company Diplomat Pay d.o.o. (“Diplomat”) paid the entire purchase price on behalf of Alta to DDM. Pending closing of the transaction, for regulatory purposes the Shares were deposited with a Swiss lawyer in Zurich acting as escrow agent. Under the SPA closing must have taken place no later than 31 July 2024. If closing did not take place by 31 July then the Shares should be transferred back to DDM. Subsequent to the sale but prior to closing taking place Alta concluded several share purchase agreements for the acquisition of a total interest in Addiko of 36.46%. Acquisition of such interest requires Alta to obtain regulatory approvals from ultimately the ECB under banking regulation and an FDI approval from the Austrian government. The former is triggered by an interest of 10%, the latter by an interest of 25%. Under Austrian FDI legislation DDM and Alta, as well as the escrow agent are prohibited from closing the sale of the Shares, because approval under Austrian FDI regulation is a statutory condition precedent to the share transfer. Despite this prohibition, which is criminally sanctioned, and against DDM’s instructions, the escrow agent transferred the Shares to Alta on 22 July 2024. DDM has initiated legal proceedings in Vienna against Alta demanding the return of the Shares. The first hearing of the case will be held on 27 September 2024. The Austrian banking regulator has informed Alta that the ECB will not grant Alta approval to own 10% or more of the shares in Addiko. Furthermore, the ECB has made public on 13 August that Alta and Diplomat are acting in concert and that by operation of law Alta and Diplomat are not entitled to vote for the shares. The ECB also filed a request to the Commercial Court Vienna to appoint a trustee for the shares held by Alta and Diplomat. Following a request from the Austrian banking regulator in June, DDM has been working closely with the regulator. The Slovenian bank NLB launched a tender offer for all shares in Addiko at a price of EUR 20 per share (later increased to EUR 22 per share) subject to 75% acceptance by shareholders. The bid unsuccessfully expired on 16 August. DDM has reserved its right to damages from the Swiss lawyer acting as escrow agent.

Outlook

Despite recent interest rate cuts and an expected modest economic rebound in the second half of 2024, the time-lag impact and continued high cost of living is expected to keep adversely affecting credit quality, increasing pressure on banks to dispose of underperforming assets and likely resulting in a slight increase in loan portfolio sale activity from the second half of 2024. We will continue to actively manage our portfolio and be disciplined in the sourcing of new investments, monitoring transactions on both a strategic and opportunistic basis. 

Financial calendar

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

Q3 report for January – September 2024:      28 November 2024

Q4 report for January – December 2024:       27 February 2025

Annual report 2024:                                        30 April 2025

Other financial information from DDM is available on DDM’s website, www.ddm-group.ch.

Presentation of the report

The report is available at www.ddm-group.ch on 29 August 2024, at 08:00 CEST.

The information in this 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 29 August 2024 at 08:00 CEST.

For more information, please contact:

Erik Fällström, Chief Executive Officer

Matthew Doerner, Chief Operating Officer

Mail: investor@ddm-group.ch

DDM Debt AB (publ) (Nasdaq Stockholm: DDM Debt 2026) is part of the DDM Group, a specialized multinational investor in situations arising out of the general strategic challenges in the European banking markets. This includes investments into assets and companies previously held by financial institutions, including performing and non-performing loans and special situations. The DDM Debt Group also engages in businesses that are related, complimentary, incidental, ancillary or similar to any of the foregoing. DDM strives to create value for its stakeholders by combining significant expertise in financial services, credit underwriting and technology with a focus on operational excellence.