2 Nov 2017

DDM Debt AB: Q3 and YTD report January - September 2017

Significant increase in portfolio value and new revolving credit facility supporting continued rapid expansion

Highlights third quarter 2017

• Entered Greece, investing EUR 50M 

• Further portfolio acquired in the Czech Republic for approximately EUR 12M

• Super senior revolving credit facility of EUR 17M successfully secured, continuing to lower the cost of funding

• Net collections increased by 25% to EUR 6.5M (Q3 2016: EUR 5.2M)

• Cash EBITDA increased by 4% to EUR 4.8M (Q3 2016: EUR 4.6M)

• Net loss for the period of EUR 0.2M (Q3 2016: profit of EUR 3.4M)

Highlights nine months 2017

• Investments in Greece, Croatia, the Czech Republic and Slovenia totaling approximately EUR 91M 

• Net collections increased by 330% to EUR 22.3M (YTD 2016: EUR 5.2M)

• Cash EBITDA increased by 286% to EUR 17.9M (YTD 2016: EUR 4.6M)

• Net profit for the period of EUR 0.2M (YTD 2016: EUR 3.4M)

• 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 

Significant events after the third quarter

• The second Croatian acquisition was finalized, following regulatory approval

Comment by the CEO

I am very happy to have been appointed as the CEO of DDM in September and to have been given the opportunity to contribute to the continued success of the company together with the rest of the DDM team. The Company has grown and developed at a fast pace and is in an extremely expansive phase.

DDM Debt made a number of significant transactions in the quarter, including our first transaction in Greece which completed in early August, establishing a first mover advantage in the country with the highest non-performing loan ratio in Europe. The sizeable portfolio, representing 48% of the total portfolio at the end of the third quarter, is in the process of being on-boarded and the workout has been initiated. The EUR 50M investment not only contributes significantly to DDM Debt’s growth but also offers strong potential for further transactions in Greece. 

The Company also acquired a portfolio in the Czech Republic in the quarter for approximately EUR 12M. The portfolio was purchased from a seller we have previously acquired portfolios from, confirming DDM’s reputation as a preferred buyer. Shortly after the end of the third quarter DDM Debt finalized its second Croatian transaction, the previously announced acquisition of a distressed asset portfolio containing secured corporate receivables.

The investments totaling EUR 91M year to date 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 the recently announced new super senior revolving credit facility of EUR 17M which was successfully secured at the end of the third quarter. The RCF is another important step in diversifying our funding and continuing to lower our funding cost.

DDM Debt’s portfolio carrying value was EUR 106.1M at the end of the third quarter of 2017, a substantial increase of 486% compared to the same period in 2016, as the significant recent acquisitions more than offset amortization, revaluation and impairment on the existing portfolio in the past 12 months.

Net collections for Q3 2017 increased by 25% compared to Q3 2016, and by 330% for the first nine months of 2017 compared to the same period last year. The increase was driven by the significantly higher portfolio value compared to the prior year, as well as the continued strong performance of the Slovenian portfolio acquired in the prior year. Net collections increased despite the fact that the recently acquired large portfolios have not yet started to contribute significantly to net collections. Cash EBITDA in the third quarter of 2017 amounted to EUR 4.8M and EUR 17.9M for 9M 2017, increases of 4% and 286% respectively compared to the corresponding period in 2016. The results of the subsidiaries acquired from DDM Treasury Sweden are included in DDM Debt’s results from 17 February.

Cash flow from operating activities before working capital changes was EUR 0.3M in the third quarter and EUR 13.2M for the first nine months of 2017 compared to EUR 3.4M in Q3 and YTD 2016. 

Market outlook

We continue to see a very strong pipeline of portfolios across our region in both existing and new markets, and a number of sizeable transactions are expected to close before year end. We will continue our rapid expansion as we continue to source attractive portfolios given our proven transaction closing capabilities and strong reputation. With the 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:

Q4 and full-year report for January – December 2017: 28 February 2018

Annual report 2017: 29 March 2018

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

CEO Andreas Tuczka and CFO Fredrik Olsson will comment on the DDM Group’s results during a conference call on 2 November 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 96, CH: +41 225 675 548 or UK: +44 203 008 9802.

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 2 November 2017 at 08:00 CET.