DDM Treasury Sweden AB: Interim report January - September 2016

Strong cash flows from portfolios and repayment of the SEK 31M 18% subordinated notes

Highlights third quarter 2016

• œ  Net collections increased by 124% to SEK 47.8M (Q3 2015: SEK 21.3M)

• œ  Cash EBITDA increased by 93% and amounted to SEK 39.7M (Q3 2015: SEK 20.6M)

• œ  Loss for the period of SEK 1.9M (Q3 2015: loss of SEK 9.9M)

• œ  The SEK 31M 18% subordinated notes were repaid on their final maturity date of 30 September 2016, decreasing future financial expenses and the average cost of borrowing

• œ  Pipeline of future transactions remains strong

Highlights nine months 2016

•  œ Net collections increased by 97% to SEK 167.1M (9M 2015: SEK 84.7M)

• œ  Cash EBITDA increased by 68% and amounted to SEK 141.2M (9M 2015: SEK 83.8M)

• œ  Loss for the period of SEK 2.7M (9M 2015: loss of SEK 2.1M)

• œ  The Hungarian transaction formally closed at the end of April 2016, resulting in stronger cash flows

Comment by the CEO

The third quarter of 2016 benefited from strong cash flows from existing portfolios, particularly in Hungary and the Czech Republic. We also continued to actively manage our portfolios and as a result in the third quarter we divested a portfolio in Poland in order to invest the funds in a beneficial alternative for investors. Combined with the strong cash flows, this enabled the full redemption of the SEK 31M 18% subordinated notes on their maturity date of 30 September 2016, which was financed using cash on hand. The redemption has enabled DDM Treasury Sweden AB to reduce its gross debt and its cost of debt.

Net collections in the third quarter of 2016 increased by 124% compared to the third quarter of 2015 driven by the collections from portfolios in Hungary and the Czech Republic, while for the first nine months of 2016 net collections increased by 97%.

Revaluation of invested assets had a negative SEK 6.2M impact in the third quarter of 2016, mainly driven by the aforementioned divestment of a portfolio in Poland. In addition, due to the ongoing weak macroeconomic environment in Russia we made downwards revaluations of several Russian portfolios. The downward adjustments were partly offset by positive revaluation of a number of other portfolios, in particular the recent Hungarian portfolio which has continued to perform ahead of expectations.

Cash EBITDA (net collections less operating expenses) for the third quarter amounted to SEK 39.7M, an increase of 93% compared to the same period of 2015. For the first nine months of 2016 cash EBITDA was SEK 141.2M, an increase of 68% compared to the first nine months of 2015.

Cash flow from operating activities before working capital changes for the third quarter of 2016 was SEK 32.5M, compared to negative SEK 17.2M for the third quarter of 2015, benefitting from the cash flows from the large Hungarian acquisition. Cash flow from operating activities before working capital changes for the first nine months of 2016 was SEK 121.9M, compared to SEK 52.1M for the same period in 2015. 

Market outlook 

We continue to see strong growth in the pipeline of portfolios for sale across our region. DDM continues to receive a significant number of invites to bid for large portfolios and we are well placed to continue the rapid expansion in our investment activities.

Given the large amount of investment opportunities, funding continues to be a key focus to sustain growth. We are targeting a long-term and sustainable capital structure and costs. With the improved cash flows we remain positive on the outlook for DDM and feel confident that we will be able to continue to deliver according to our strategy. 

CEO Gustav Hultgren and CFO Fredrik Olsson will comment on the DDM Group’s results during a conference call on 10 November 2016, starting at 10:00 a.m. 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 90, CH: +41 225 675 548 or UK: +44 203 008 9801.

The information in this Interim Report requires DDM Treasury Sweden 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 10 November 2016 at 8:00 a.m. CET. 

For more information, please contact:

Hans Uhrus, Investor Relations Manager
Mail: investor@ddm-group.ch | Tel: +46 7689 50101

DDM Treasury Sweden AB (publ) (NGM: DDM1) is a subsidiary wholly owned by DDM Holding AG. DDM Holding AG (First North Stockholm: DDM) is a key acquirer and manager of distressed assets. Since 2007, the DDM Group has built a successful platform in Eastern Europe, currently managing 2.3 million receivables with a nominal value of over EUR 2 billion.

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