The KRUK Group (WSE: KRU), the leader of the debt management market in Central Europe, has published its performance figures for Q1 2015:
- Net profit of PLN 50.6m, up 27% year on year; PLN 133.2m in revenue, up 11% over Q1 2014;
- Recoveries from purchased debt portfolios reached as much as PLN 187.2m, having increased 22% on Q1 2014; In Q1 2015, the KRUK Group companies invested PLN 44.9m in new debt portfolios with a nominal value of PLN 511m;
- After the end of Q1 2015, KRUK purchased a portfolio of unsecured retail debt in Romania with a nominal value of PLN 761m, for PLN 50m, marking the historically largest transaction in the Romanian retail debt market;
- After the end of Q1 2015, KRUK announced its decision on a PLN 20m public bond issue and PLN 100m private bond placement. It will be the first time KRUK has offered notes in a public offering with fixed interest of 4.5% pa.
KRUK Group – consolidated financial highlights for Q1 2015
|% of 2014
*Cash EBITDA = EBITDA + recoveries from purchased debt portfolios – revenue from collection of purchased debt
"We maintain momentum after a year of the best performance on record. In Q1 2015 alone, we posted net profit of more than PLN 50m, but what is more important is that the result was achieved on the back of very high cash recoveries. Cash EBITDA grew 31% compared with Q1 2014," said Piort Krupa, President of the KRUK Management Board.
In Q1 2015, revenue totalled PLN 133.2m, the second best result in KRUK's history. In particular, the Group's performance was positively affected by higher recoveries, which reached as much as PLN 187.2m in the reporting period.
"We are consistently implementing our strategy for 2015-2019. One of its objectives is to ensure higher recoveries from debt portfolios purchased so far. We should achieve further improvement in this area. We also benefit from improving economic conditions. The unemployment rate is falling and real income is on the rise, increasing debtors' ability to pay their debts. KRUK spreads debt repayment over manageable instalments and gives a chance to get out of debt," said Piotr Krupa.
New investments and landmark transaction in Romania
Despite the usually slow start of the year on the debt purchase market, in Q1 2015 KRUK made 14 new investments. KRUK Group companies purchased debt portfolios with a nominal value of PLN 511m for PLN 44.9m. After adjustment for investments in a mortgage-backed debt portfolio purchased on March 31st 2014, the expenditure was 13% higher year on year.
"We are seeing that strong debt supply from banks in Poland, Romania, Czech Republic and Slovakia continues. Thanks to our experience and market position, we are the banks' preferred partner, as confirmed by one of the recent deals in Romania. Let me remind that KRUK purchased a debt portfolio with a nominal value of PLN 761m from Piraeus Bank Romania S.A. for PLN 50m. The transaction was the largest one in the history of the Romanian unsecured consumer debt market. Concurrently, we are taking part in auctions in Germany, gaining experience in portfolio valuation and looking for our first investment opportunity on this market," said Piotr Krupa.
Issue of bonds
After the end of Q1 2015, KRUK announced the plan to issue bonds with a total nominal value of PLN 120m. In the public offering, KRUK will offer retail investors bonds with a total nominal value of PLN 20m, maturing in five years and bearing fixed interest of 4.5% per annum. As part of the private placement, addressed mainly to institutional investors, KRUK intends to extend the tenor to six years and issue bonds with a total nominal value of PLN 100m, bearing interest at a floating rate.
"After many years of hard work and excellent results, KRUK has become perceived as a reliable bond issuer by institutional and retail investors. For the first time in our history, we want to make a public offering of notes with fixed interest. Our bonds are an attractive investment and the issue proceeds will be used to finance the Group's operations, which mainly involves debt portfolio purchases," said Piotr Krupa.