The KRUK Group (WSE ticker: KRU), Central Europe’s leading debt management company, has published its performance figures for 2016:
- recoveries from debt portfolios rose 20% year on year, from PLN 825m in 2015 to PLN 992m;
- the Group invested a record amount of PLN 1,286m in debt portfolios on seven markets: Poland, Romania, the Czech Republic, Slovakia, Germany, Spain, and Italy; the largest investments in 2016 were made in Poland (PLN 427m, 33% of the total), Romania (PLN 379m, 30% of the total), and Italy (PLN 322m, 25% of the total);
- the nominal value of debts purchased in 2016 alone was PLN 16.4bn, bringing the nominal value of the entire portfolio to PLN 43bn;
- the Group’s revenue increased to PLN 783m, from PLN 611m in 2015 (up 28%);
- cash EBITDA grew 22%, reaching PLN 630m in 2016;
- consolidated net profit came in at PLN 249m, relative to PLN 204m in 2015 (up 22%);
- earnings per share rose 19%, to PLN 14.1, and return on equity was 24% (the equity issue of December 2016 not included);
- as part of purchases made in 2016, the Group completed several major projects, such as closing of the acquisition of a debt portfolio from P.R.E.S.C.O., buying, together with the World Bank, a portfolio in Romania, and purchasing significant portfolios from Italy’s largest banks;
- in December 2016, KRUK successfully raised PLN 215m through accelerated bookbuild for 1 million new shares. The issue was carried out as private placement without publishing a prospectus. The capital will facilitate strategic projects designed to expand the KRUK Group’s presence on foreign markets;
- in 2016, KRUK expanded its business in Western Europe through the acquisition of CreditBase International of Italy and Grupo Espand of Spain. Both companies have on-the-ground experience in their local markets, and had worked with KRUK for several months in debt portfolio valuations and management;
- the KRUK Group updated its strategy for 2015−2019, under which earnings per share are targeted to grow by at least 15% annually and return on equity is to be maintained above 20%;
“Release of our full-year performance figures is a good moment to sum up the team’s accomplishments in 2016 and to plan further objectives and steps. We have closed 2016 with another set of record-breaking figures. Our net profit rose to PLN 249m and recoveries from our debt portfolio were close to PLN 1bn, with the amicable settlement strategy having proved its worth in making debtors pay. Investments in our seven markets reached an impressive PLN 1.3bn. In 2016, we successfully delivered a number of projects to shape the KRUK Group’s future position. The key ones included acquisition of a portfolio from P.R.E.S.C.O., joint project with the World Bank in Romania, and acquisition of two debt management companies in Italy and Spain, the countries which only 3−4 years ago we were just exploring as our prospective markets and where we are now considered a significant player. Additionally, we raised more than PLN 1bn on the capital market − through the PLN 215m equity issue to finance further business expansion, and by strengthening our position on the bond market and issuing debt securities worth PLN 830m, including PLN 340m in public offerings.
All these projects will provide a springboard for our further growth in Poland and across Europe, where we will continue to develop our amicable collection model. Today, KRUK is already worth more than USD 1bn, but we remain strongly focused on the future. In the coming years, I would like to see our EPS grow by at least 15% annually, with ROE at no less than 20%,” said Piotr Krupa, President of KRUK S.A.
KRUK’s double billion
KRUK’s performance in 2016 was supported by higher recoveries from its own portfolios, which went up 20% to PLN 992m. In Q4 alone, they amounted to PLN 291m, up 14% on the previous record-breaking quarter.
“We are the first Polish debt management company to have come close to the PLN 1bn mark in recoveries in a single year. Few other companies in Europe can boast better figures. Our operations are becoming more and more efficient, with the improving financial standing of households in Poland and other countries additionally working to our advantage,” said Piotr Krupa.
In 2016, companies of the KRUK Group invested PLN 1,283m in 99 new debt portfolios in Poland (PLN 427m), Romania (PLN 379m), Italy (PLN 322m), and other markets (PLN 155m). The total nominal value of the portfolios was PLN 16.4bn.
“The projects carried out in Poland and Romania in 2016 and our opening up to new Western European markets took us to a totally new level of investment in the debt management market. We are working with major financial institutions on seven markets. This puts us well on track to meet our long-term objective, envisaged for beyond 2019, of becoming the largest listed debt management company globally. In this respect we can rely on our unique operational strategy, which is valuable and effective in solving our clients’ debt problems. The supply of debts should remain strong in the years to come,” said Piotr Krupa.
Good access to financing
By raising more than PLN 1bn on the capital market (PLN 830m from bond issues and PLN 215m in share issue proceeds), KRUK confirmed its good access to financing. As at the end of 2016, KRUK had also access to PLN 682m in credit facilities, of which PLN 240m could be drawn in the euro.
“Let me take this opportunity to thank all those who placed their trust in KRUK by investing in our securities last year. We are also very satisfied with our relations with banks. We are happy to see a growing group of investors and banks ready to finance the KRUK Group’s business growth, also on new markets. We are keeping up the momentum in developing other channels − in the coming years we will focus on financing in the euro. Even though we invested record-high amounts in 2016, our financial position permits further investments and our debt ratios remain low,” said Piotr Krupa.
In 2016, KRUK completed its Third Public Bond Issue Programme, worth PLN 300m, and launched the Fourth Bond Issue Programme, under which it has already raised PLN 40m from retail investors, while another PLN 460m still remains available.
“The decision to start the next public bond issue programme was prompted by our need for capital and was a response to the market’s considerable interest in KRUK bonds. We also appreciate institutional investors’ continued confidence in KRUK,” Piotr Krupa added.
In December 2016, KRUK successfully raised PLN 215m from a private placement of 1 million shares, without publishing a prospectus, with investors in Poland and abroad. This placement procedure was approved by all shareholders present at the General Meeting of November 29th 2016.
“The success of our first share issue since KRUK’s IPO on the WSE is a proof of confidence we have won among both Polish and foreign investors. Seeking to continue on the value growth path, we decided to carry out another equity issue. The proceeds of PLN 215m will be applied towards strategic projects to expand our business on new markets, including acquisitions of other entities,” said Piotr Krupa.
The KRUK Group’s balance sheet, carrying low debt levels, will accommodate purchases of new portfolios. At the end of 2016, net debt to equity stood at 1,1x, and net debt to 12-month cash EBITDA was 2,2x.