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Consistent growth of the BEST Group

The total income generated by the BEST Group in the first half of 2014 amounted to almost PLN 28 million. If a one-off event in 2013 is discounted, this represents an increase of over 23%. BEST remains one of the least indebted companies of debt collection and has cash for purchases of new debt portfolios.

 

In the first half of 2014 operating revenues of the BEST Group, one of the leading companies in the receivables management market in Poland, amounted to PLN 53.8 million, and the comprehensive income (total) attributable to Shareholders of BEST in this period reached PLN 27.9 million compared to: PLN 82.9 million and PLN 58.3 million in the first half of 2013.

 

When comparing year-to-year results of the BEST Group it should be taken into consideration that a significant positive impact on the results of last year's event was created by a one-off event; a revaluation of the fair value of debt portfolios of the BEST I NSFIZ fund, acquired by BEST S.A. at the end of 2012. As a result, in the first half of 2013 the comprehensive income of the Investment in Debt Segment amounted to PLN 56.2 million, PLN 35.7 million of which is the amount of the revaluation resulting from eliminating significant risks associated with the fund and actualisation of the discount rate used for the valuation.

 

"In the first half of 2014 the comprehensive income of the Investment in Debt Segment amounted to PLN 23.3 million, which represents an increase of almost 14% compared to the result for the corresponding period of the previous year, after adjustment associated with the one-off revaluation. A significant improvement in the Debt Management and Investment Funds Management Segments was also noticed. In the first half of this year the comprehensive income in these two segments increased by PLN 2.7 million, that is 144% compared with the first half of 2013. This increase was mainly due to higher income from the funds debt service and contract collection," Krzysztof Borusowski, CEO of BEST, indicated.

 

"As a result, the overall increase in the comprehensive income of the BEST Group, after adjusting the comparable data by the one-off event, exceeded 23%. This figure shows the rate of development of a repetitive part of our business," the CEO concluded.

 

In the first half of this year the BEST Group also noted a significant increase in cash – the cash balance increased by PLN 55.5 million during this period. In addition to cash generated from operations, BEST also conducted two bond issues: private, amounting to PLN 16 million (Series J), and public, of about PLN 45 million (Series K1) – it was the first issue made under a public bond issue program of up to PLN 300 million. At the same time, the company decided on an early buyout of bonds of PLN 10 million (Series E).

 

The BEST Group intends to spend the money raised from the issue of bonds on purchasing new debt portfolios. "We have a secured financing, which allows us to quickly consummate potential transactions. In the first half of 2014 our activity on the debt trading market was quite limited, which was a measured and, in our opinion, the only rational action. We noticed a marked increase in the prices of debts. We find it is not reasonable and results from the increased inflow of capital into the market, rather than from improving the quality of debt portfolios sold by banks. In our opinion, the prices offered by the bidders in certain tender procedures often do not provide cost-effectiveness," said Krzysztof Borusowski.

 

"Our "restraint" in purchases of new debt portfolios in recent months is proof that our investment decisions are based not on the availability of capital, which we do have, but on analysis, proven valuation and, one might say, a fairly conservative approach. We invest only in these portfolios and at these prices that give us a real opportunity to achieve rates of return justifying the risk taken," the CEO remarked.

 

In the event of stabilisation of the situation on the debt trading market, the BEST Group has the potential to participate in transactions exceeding the value of investments made in previous years. Currently, BEST uses financial leverage in a very limited degree. At the end of June 2014 the debt ratio of the BEST Group was one of the lowest in the industry – 0.30. Meanwhile, the level of this indicator accepted by the bondholders of the company ranges from 2.00 to 2.50.

 

Last Wednesday, August 27, BEST announced winning the tender for the purchase of a debt portfolio of Euro Bank by the BEST I NSFIZ fund. The nominal value of this portfolio is approximately PLN 321 million.

 

 

Selected financial results of the BEST Group

(PLN mln)

First half of 2014

(A)

First half of 2013

(B)

Y/y change

(A)/(B)

First half 2013 
adj.**
(C)

Y/y change

(A)/(C)

Operating income

53.8

82.9

-35%

47.2

+14%

Sales profit

34.3

61.4

-44%

25.7

+33%

Net profit*

28.3

57.4

-51%

21.7

+30%

Comprehensive income*

27.9

58.3

-52%

22.6

+23%

 

* attributable to the BEST Shareholders

** after eliminating the one-off revaluation of debt portfolios of the BEST I NSFIZ fund, consolidated under the full method

 

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BEST: Company Overview

BEST S.A. is a company that has been listed on the Stock Exchange in Warsaw since 1997, specialising in trading in and managing of non-performing debt. The BEST Group actively invests in debt portfolios (especially banking ones) with the use of securitisation funds, and also provides debt collection services for third parties: banks, telecommunication operators and power companies, and other mass service providers.

 

BEST is also the sole shareholder of BEST TFI, which obtained a licence to operate from the Polish Financial Supervision Authority (KNF) in 2008. The combination of expertise in the field of debt collection with that in the establishment and management of investment funds helped the entity to concentrate all elements of its business model within one capital group.

 

BEST TFI currently manages three securitisation funds: BEST I NSFIZ, BEST II NSFIZ and BEST III NSFIZ, the assets of which include debt portfolios with a total par value of 8.2 billion PLN (as at the end of June 2014).

 

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To obtain additional information go to www.best.com.pl or contact us:

 

Krzysztof Woch

NBS Communications

tel. 22 826 74 18 / mobile 516 173 691

e-mail: kwoch@nbs.com.pl

Piotr Wojtaszek

NBS Communications

tel. 22 826 74 18 / mobile 500 202 355

e-mail: pwojtaszek@nbs.com.pl

 

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