28 Jul 2022

Q2 and half year report January – June 2022

Collections broadly in line with prior year whilst market volatility continued to impact earnings

Highlights second quarter 2022

• Gross ERC at the end of June 2022 was EUR 283m (297 at December 2021)
• Cash at the end of June 2022 was EUR 52.8m (62.7 at December 2021)
• Gross collections amounted to EUR 15.5m (13.4)*
• Net collections amounted to EUR 13.4m (11.3)*
• Cash EBITDA amounted to EUR 10.8m (9.2)*
• Net loss for the period of EUR 3.6m (0.2)* including EUR 2.4m mark-to-market loss on the investment in Addiko Bank driven by market volatility

Highlights six months 2022

• Gross collections amounted to EUR 31.1m (27.8)*
• Net collections amounted to EUR 26.2m (23.8)*
• Cash EBITDA amounted to EUR 22.6m (19.3)*
• Net loss for the period of EUR 4.7m (0.4)* including EUR 5.8m mark-to-market loss on the investment in Addiko Bank driven by the proposed CHF law in Slovenia and market volatility
• Investment in a bolt-on portfolio in Croatia with a gross collection value (face value) of over EUR 20m
• Strategic partnership in Italy with Borgosesia S.p.A completed the structuring of a co-investment in a portfolio with a gross collection (face value) of over EUR 10m as part of the target investment volume that amounts to up to EUR 100m over a three-year horizon

Significant events after the end of the quarter

• Acquisition of 50.2% of AxFina Holding S.A, a pan European debt servicing provider and business outsourcing company

Comment by the CEO

Collections during the second quarter were slightly above the same period in 2021, whilst our earnings continued to be impacted by market volatility which resulted in a EUR 2.4m mark-to-market loss on the investment in Addiko Bank, partially offset by FX gains of EUR 1.0m.

Continued market volatility will increase NPL volumes

We expect the market volatility observed during the first half of the year to continue for the remainder of 2022. Given the uncertainties in the macroeconomic environment and the impact of inflation on businesses and the cost of living for consumers, we expect higher default rates and an increase in the volume of NPL portfolios coming to the market. Given this background, we continue to monitor opportunities both in existing markets across the SCEE region and by recently entering new markets by teaming up with strategic partners and co-investors.  

Strategic acquisition in Switzerland

Regarding the planned acquisition of 100% of the share capital of Swiss Bankers Prepaid Services AG (“Swiss Bankers”) the regulatory approval process is ongoing. The DDM Debt Group is currently reviewing the situation and is in dialogue with the stakeholders and selling shareholders of Swiss Bankers. Swiss Bankers is the Swiss market leader in prepaid cards and provides innovative, credit-based payment products and offers solutions in cashless, globally secure payment transactions.

Acquisition of majority stake in debt servicing and business outsourcing company AxFina

Shortly after the quarter end DDM Debt acquired 50.2% of the share capital of AxFina Holding SA (“AxFina”). AxFina is a pan European debt servicing provider and a key partner for DDM’s loan portfolios. In addition to its core debt servicing solutions, AxFina is also providing business outsourcing services and digital debt management solutions (“Finastic”) to multiple industries. AxFina is active in 7 countries and has c. 180 employees. The DDM Debt Group expects to profit from the intended growth of the service revenues of AxFina, both in (third party) debt servicing as well as in digital solutions, which complement the asset intensive business of the DDM Debt Group. AxFina will also facilitate new market entries for the DDM Debt Group. The seller of the stake in AxFina is DDM Group Finance S.A, with the transaction carried out at an implied valuation for 100% of AxFina of EUR 28m. In addition to the now acquired stake in AxFina, DDM Debt entered into a call option agreement giving it the right to acquire the remaining shares in AxFina held by DDM Group Finance S.A. at the same terms until 31 December 2022. AxFina will remain an independently run company. The acquisition strengthens the DDM Debt Group’s equity story to accelerate into a pan-European investment company around NPLs, Servicing, Consumer Finance and FinTech.

Equity base

To be prepared to capture the opportunities we expect to come up over the coming quarters, we are also intensifying our efforts to strengthen the equity base of the DDM Group. We are therefore evaluating options to access equity or equity linked capital markets by potentially seeking a listing of DDM Finance AB or another DDM Group entity.

Financial calendar

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

Interim report for January – September 2022: 30 November 2022

Q4 and full year report for January – December 2022: 23 February 2023

Annual report 2022: 31 March 2023

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 July 2022, at 08:00 CEST.

CEO Florian Nowotny and CFO Fredrik Olsson will comment on the DDM Group’s results during a conference call on 28 July 2022, starting at 10:00 CEST. The presentation can be followed live at www.ddm-group.ch and/or by telephone with dial-in numbers: SE: +46 8 505 163 86, UK: +44 20 319 84884, Global toll free: +1 412 317 6300, Pin code (for all numbers): 8265134#.

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 July 2022 at 08:00 CEST.