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BEST GROUP RECORDS HIGH REPAYMENTS AND INCREASE OF CASH EBITDA IN H1 2020

In the first half of 2020, total repayments from the managed claim portfolios reached a record level of PLN 182.5 million (+29% YOY), of which repayments due to BEST Capital Group amounted to PLN 164.4 million (+33% YOY). The generated cash EBITDA amounted to PLN 105.9 million, up by 27% compared to the same period of 2019. With high operating revenues and limited investments in new claim portfolios, BEST Group has been able to significantly reduce its debt and prepare for further growth as soon as there is a good opportunity to investment in new claim portfolios.

 

– In the recent quarters, we have had a strong focus on improving the recovery efficiency of claims purchased in previous years. As a result, despite limited investments in new portfolios, our repayments have increased significantly. We have also been very efficiency in implementing changing in our work organisation in connection with the COVID-19 pandemic, and maintaining continuity of key processes. Within a very short time, a substantial part of our team switched to telework. This was made possible by previous years’ investments in technology and our high operating efficiency. We are happy that, despite an uncertain market environment, we have exceeded our operational assumptions for the first half of this year – says Krzysztof Borusowski, President of the Management Board of BEST.

 

Cautious valuation of claims

 

– The level of repayments generated in the first half of the year was PLN 20.9 million higher than planned in our claim measurement models. However, because of the uncertainty surrounding the effect of the pandemic on future repayments, we did not decided to increase our revenue forecasts in the coming periods, and we even lowered them, especially for the Italian portfolios. The total effect of negative revaluations in the first half of this year was PLN 16.4 million – says Marek Kucner, Vice-President of the Management Board of BEST.

 

The revaluations significantly impacted the reported operating revenues of BEST CG, which, in the first half of 2020, amounted to PLN 132.6 million, down by 3% compared to the same period a year earlier. The financial results were also greatly affected by a high level of court and enforcement fees. In the first half of this year, these costs amounted to PLN 30.5 million, up by 84% year-on-year. – In the first half of this year, we referred 194 thousand cases to court enforcement. We also increased our employment level, which means high labour costs. But these investments will translate into growth of claim repayments in the future – says Krzysztof Borusowski.

 

Robust cash flows and continued improvement of the balance sheet structure

 

– Importantly for our liquidity, the cash EBITDA amounted to PLN 105.9 million, which is 27% more compared to the last year’s level. By contrast, we spent only PLN 1.5 million on new claim portfolios. This allowed us to repay financial liabilities amounting to PLN 165 million, of which PLN 20 million before the contractual due date. Our net debt-to-equity ratio is now at a very low level. We are getting ready to buy claim portfolios as soon as the market conditions are favourable. We expect that the debt trade market, which has frozen due to the pandemic, will recover at the turn of this and the next year, similarly to the bond market. We are monitoring the situation very closely – adds the President of the Management Board of BEST.

 

In the first half of 2020, the net profit attributed to BEST’s shareholders was PLN 25.8 million, compared PLN 40.2 million a year earlier. The decrease in profit reflects BEST CG’s cautious approach to the valuation of claim portfolios, and higher court and enforcement costs.

 

Next step for Payhelp

 

In the last half-year, the Payhelp service, introduced by BEST CG in the last year, became part of the e-services of Santander Bank Polska under the name “eWindykacja”. Thanks to the established cooperation, Santander Bank Polska's customers can easily submit unpaid invoices not paid by their counterparties for debt recovery.

 

Selected operating and financial results of BEST Capital Group

(PLN million)

H1 2020

H1 2019

change YOY

Repayments under portfolios acquired, including:

182.5

141.3

29%

  due to BEST Capital Group

164.4

123.5

33%

Operating revenues

132.6

136.2

(3%)

Operating profit

50.7

72.9

(31%)

Net profit attributable to BEST’s shareholders

25.8

40.2

(36%)

cash EBITDA

105.9

83.5

27%

 

 

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