75 million PLN for the development of the AB Group – success of a further issue of long-term corporate bonds

The AB Group, the largest distributor of IT and consumer electronics in Poland and in Central & Eastern Europe successfully finalized its yet another issue of long-term bonds to diversify development financing sources. In effect – similarly to years 2014-2015 – the programme comprised the issue of unsecured 5-year debt securities with the nominal value of PLN 75 million. Within the scope of the aforementioned three issues of bonds, financial institutions acquired AB SA bonds with the total nominal value of PLN 245 million, with the average margin at 1.69 pp above WIBOR 6M. Past issues are listed on the Catalyst market, and AB’s intention is to place the newest bonds series on the market as well.

– The change of the AB Group financing structure since 2014, based on long-term bonds that have replaced short-term bank loans, has provided a growth impulse for the company. All bonds issued by AB have a maturity of 5 years, which confirms AB’s position amongst the largest and most stable issuers as well as recognition for AB amongst professional investors as the best company in the sector in terms of quality – stated Grzegorz Ochędzan, AB Group CFO.

In Q1 2017 (3rd quarter of the financial year 2016/2017), the AB Group again improved its advantage over competitors. On this demanding market, it increased revenues by almost 9% YOY, to PLN 1.85 billion, generating EBITDA of PLN 24.3 million (stable YOY) and net profit of PLN 13.2 million (+6.2% YOY). In the calendar year 2016, the company exceeded the PLN 8 billion threshold of consolidated revenues and generated EBITDA of PLN 119 million as well as net profit of PLN 68 million. This was the result of an effectively executed long-term development strategy, which is safely and prudentially incorporated into the company’s DNA. The AB Group maintains high profitability compared to the entire sector, and it also has the lowest SG&A costs. For years, the AB Group has been taking pride in the highest equity in the sector, valued at PLN 640 million at the end of Q12017, which is a few times higher than that of nearest competitors. The AB Group has a model business financing structure, i.e. 1/3 equity and 2/3 debt; even before the bonds issue, which was just finalized, one half of the interest bearing liabilities included long-term bonds and loans. This is the result of observing the safety principle, incorporated into the AB Group Development Strategy.

– A strong capital base and responsibly conducted business make us a fair and reliable partner for suppliers, clients and financial institutions. Both banks and insurance institutions appreciate the AB Group’s financial power. As a result, we have a lot of space to finance further development, both on the purchasing and sales side – underlines Grzegorz Ochędzan.

It is worth noting that in spite of a dynamic development of business activity, the AB Group has reduced its interest bearing debt. At the end of December 2016, the net debt YOY dropped by as much as 20%, i.e. nominally by over PLN 87 million. In Q1 2017 in comparison to Q1 2016, in spite of an increase of the scale of turnover, the net interest bearing debt was reduced by further PLN 13.5 million, and its relation to EBITDA amounts to the distribution sector-safe 2.9 (decrease from last year’s 3.2). During the last four quarters ended on 31 March 2017, the AB Group improved operating cash flow by over PLN 58 million YOY.