KRUK has successfully started the year with strong development in Europe and PLN 61m of net profit

The KRUK Group, the polish debt management company which grows into market leader in Europe, has published its performance figures for Q1 2016.

• The KRUK Group strengthened its position in Central Europe and generated in Q1 2016 PLN160.7m of revenues, up 21% on Q1 2015. 47% of revenues came from foreign markets – mostly Romania but also from Czech Republic, Slovakia, Germany and Italy.
• In Q1 2016, net profit increased to PLN 60.9m and was 20% higher year on year and 38% higher quarter on quarter.
• Recoveries from purchased debt reached PLN 216.5m, up 16% on Q1 2015.
• The KRUK Group invested PLN 64.1m in seven debt portfolios with a total nominal value of PLN 413m. The expenditure was up 43% year on year.
• In Q1 2016, KRUK launched the PLN 300m Third Public Bond Issue Programme, issuing Series AB1 bonds with a value of PLN 65m, bearing interest at a rate of 315 basis points above 3M WIBOR, and issued six-year bonds with a value of PLN 150m and a margin of 325 basis points above 3M WIBOR in a private placement.
• After the end of Q1 2016, KRUK:
  • closed the acquisition of a portfolio from the P.R.E.S.C.O. Group in Poland, - KRUK acquired 2 million accounts with a nominal value of PLN 2.7bn and established new branch in Pila, simultaneously employed 80 people.
  • won its first auction in Spain to buy a debt portfolio with a nominal value of PLN 13m,
  • received from a Romanian selling bank a notice of acceptance of a bid placed in an investment project in Romania carried out together with International Finance Corporation, a part of the World Bank − the unsecured debt portfolio has a nominal value of PLN 2.6bn.

Consolidated financial highlights for Q1 2016 (PLNm)

*Cash EBITDA = EBITDA + recoveries from purchased debt portfolios - revenue from collection of purchased debt

“KRUK had a remarkably successful beginning of 2016 as its Q1 net profit exceeded PLN 61m. This is the best quarterly result in our history, an effect of high market position not only in Poland, but also in many countries in Europe. We are the market leader also in Romania, prominent participant in Czech Republic and Slovakia and a serious debutant in Western Europe: in Germany, Italy and Spain. After the very good start of the year, our message to customers and trading partners as well as our development plans remain the same. We want to continue pursuing our unique strategy, offering our clients debt settlements with convenient repayment schedules. We also plan to seek further excellence in our operations, achieve high cost efficiency, and offer the best products on the debt management market in Europe,” said Piotr Krupa, President of the Management Board of KRUK S.A."

New investments

In Q1 2016, the KRUK Group invested PLN 64.1m in seven debt portfolios with a total nominal value of PLN 413m. This time, KRUK’s main investments were made in Poland, where the company purchased, among others, a large portfolio of unsecured retail debt for PLN 51.9 million from Santander Consumer Bank S.A. Other investments were made in Germany, Romania and the Czech Republic.

“We enjoy the benefits of being the leader in three debt market segments − unsecured consumer debt, mortgage-backed debt and corporate debt. Additionally, our extensive geographical presence and rich product portfolio allows us to participate in a very large number of auctions and select the best investment opportunities on the following seven European markets: Poland, Romania, the Czech Republic, Slovakia, Germany, Italy and Spain. Prospects for new investments are therefore very good. Banks and consumer finance institutions are showing growing interest in selling their debt portfolios and we participate in all auctions across Europe. This year we stand a chance to deliver our best performance ever,” added Piotr Krupa.

After the end of the first quarter, KRUK made significant progress in certain ongoing investment projects, coming another step closer to achieving its strategic goal of becoming one of Europe’s top three debt management companies. The KRUK Group closed the acquisition of a portfolio from the P.R.E.S.C.O. Group, a historic transaction on the Polish market marking a large-scale opening of the secondary debt purchase market in Poland. KRUK took over 2 million cases with a total nominal value of PLN 2.7bn.

The KRUK Group also expanded its presence on foreign markets. It won its first auction in Spain to buy a debt portfolio with a nominal value of PLN 13m. Furthermore, it received from a Romanian selling bank a notice of acceptance of a bid placed in an investment project in Romania carried out with International Finance Corporation, a part of the World Bank. This unsecured debt portfolio has a nominal value of PLN 2.6bn.

Issue of notes

KRUK is constantly working on sources of financing to support its future growth. In February, KRUK opened the Third Public Bond Issue Programme with a total nominal value of PLN 300m. Under the Programme, KRUK issued and allotted to investors Series AB1 bonds with a nominal value of PLN 65m, maturing in five years and bearing variable interest at the rate of 3M WIBOR plus margin of 315bps.

“Our latest issue showed that investors continue to have great confidence in us and want to be a part of our business. The nearly one thousand investors who placed subscription orders for our bonds, for an impressive amount of PLN 336m, is a proof of successful cooperation between KRUK and thousands of investors in Poland. We wish to make KRUK’s reputation as a solid issuer known on the European market. We are currently working on new financing in the euro to support our investment capacities on large markets in the eurozone,” said Piotr Krupa.

The Company is also an active issuer of private placement bonds. In Q1 2016, it issued six-year bonds with a value of PLN 150m and a margin of 325bps above 3M WIBOR in a private placement.

Despite gaining wider access to external sources of financing, KRUK keeps its debt at record-low levels and its financial position permits further investment. As at the end of Q1 2016, its interest-bearing net debt to equity ratio went down to 0.9x.