Q3 and nine months report January – September 2023

Strengthened focus on NPLs and continued strong cash position

Highlights third quarter 2023

• Cash at the end of September 2023 was EUR 33.1m (52.3 at December 2022)
• Agreement signed for acquisition of NPL portfolio in Romania with a gross collection value of over EUR 1 billion
• Gross ERC at the end of September 2023 was EUR 246m (283 at December 2022)
• Gross collections amounted to EUR 9.1m (23.2)*
• Net collections amounted to EUR 8.1m (20.8)*
• Cash EBITDA amounted to EUR 3.8m (17.3)*

Highlights nine months 2023

• Gross collections amounted to EUR 39.4m (54.4)*
• Net collections amounted to EUR 34.5m (47.0)*
• Cash EBITDA amounted to EUR 22.0m (39.9)*
• Sale of 5% stake in Borgosesia S.p.A (completed in October) and associated NPL portfolio due to continuous active asset management
• Acquisition of a further 25% of AxFina Holding S.A, a pan European debt servicing provider and business outsourcing company, taking DDM Debt’s total holding to about 75%
• Nordiska terminated the planned acquisition of Swiss Bankers and the combination with Omnio
• Razvan Munteanu appointed as Chief Executive Officer effective 1 August

Significant events after the end of the quarter

• Acquisition in Poland of E-Kancelaria Group, a fully licensed loan servicing platform, through AxFina group

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

Comment by the CEO

The DDM Debt group ended the third quarter with a continued strong cash position of EUR 33.1m despite a seasonally soft quarter for collections. The DDM Debt group is currently strengthening its focus on NPLs, and in the third quarter the group signed an agreement to acquire a sizeable NPL portfolio containing unsecured consumer receivables located in Romania, with the transaction expected to complete in December. The servicing of the portfolio will be performed by AxFina, part of the DDM Debt group. The gross collection value (face value) of the portfolio is over EUR 1 billion with the acquisition financed by cash on hand. We also completed the sale of our 5% stake in Borgosesia S.p.A at the start of the fourth quarter following receipt of regulatory approval.

In November AxFina, a 75.2% owned subsidiary of DDM Debt, acquired 100% of the share capital of E-Kancelaria, a Polish loan servicing and debt collection company headquartered in Wrocław. E-Kancelaria provides leading solutions in the field of debt collection, portfolio investments and legal advisory. The acquisition is expected to increase NPL portfolios by about EUR 5m. The acquisition of E-Kancelaria is a strategic milestone in AxFina’s ambition to become the leading technology-powered asset and loan servicer in Central and Eastern Europe. By acquiring E-Kancelaria, AxFina will further strengthen its market reach and operational scale in the Polish market. 

There have also been some key changes to the corporate governance of the group, with DDM Debt’s indirect parent company DDM Holding AG delisting its shares from Nasdaq First North Growth Market in September. Andreas Tuczka has also left the DDM Boards since the end of the third quarter, being replaced on the Board of DDM Debt AB by Keith Halsey.

Outlook

Rising bankruptcies and persistent inflation are expected to result in increased volumes of NPLs. As borrowers across Europe face continued rising interest rates and an uncertain macroeconomic environment, banks and other holders of credit exposures are expected to take a more pro-active approach to managing their NPL portfolios, increasing transaction activity. We will continue to be disciplined in the sourcing of new business, keep actively managing our portfolio and monitoring investment cases across our region on both a strategic and opportunistic basis. 

Financial calendar

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

Q4 report for January – December 2023: 29 February 2024

Annual report 2023: 30 April 2024

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

Presentation of the report

The report and presentation material are available at www.ddm-group.ch on 28 November 2023, at 08:00 CET.

CEO Razvan Munteanu and CFO Fredrik Olsson will comment on the DDM Debt Group’s results during a conference call on 28 November 2023, starting at 10:00 CET.

The presentation can be followed live via the webcast at www.ddm-group.ch, or via teleconference with prior registration at https://conference.financialhearings.com/teleconference/?id=5004871.

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 28 November 2023 at 08:00 CET.

For more information, please contact:

Razvan Munteanu, Chief Executive Officer
Tel: +41 41 766 1420

Fredrik Olsson, Chief Financial Officer
Tel: +41 79 331 30 17

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. 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.