AB Group closes the 30 million PLN bond issue

AB Group has issued a new batch of four-year bonds with a total face value of 30 million PLN at a margin of only 2.5% over the six-month WIBOR. The issue was carried out by Bank Pekao S.A. Investors in the debt securities market value AB for its great financial performance, reliability and the Group’s long-term growth strategy. AB Group issued 3,000 unsecured series AB06 (ABE0726) with a face value of 10,000 PLN each, with maturity date on 14 July 2026. The securities have already been listed on the Catalyst market of the Warsaw Stock Exchange, and their interest rate is 250 basis points over the six-month WIBOR index. –In spite of the extremely difficult market circumstances, we managed to find buyers for bonds at prices seen back in 2018 and 2020. This shows that quality issuers are appreciated by investors and can still count on relatively low margins. Moreover, this was the first successful corporate bond issue to financial institutions after the invasion of Ukraine. The conflict has brought about very high volatility in the bond market and is one of the reasons for the dynamic growth of credit spreads – the latter even doubled in many cases. We are pleased that we can support AB Group in its long-term success as the largest player in the debt financing market in Poland,” says Piotr Wochniak, Managing Director for Financial Markets and DCM at Bank Pekao S.A. We are grateful to our investors for trusting us and for noticing our unique market advantages. Thanks to our healthy fundamentals, we have many financing options, which is why we are creating the optimal mix that is most favourable from the shareholders’ point of view. Diversification based on bonds remains one of our financial interests,” says Andrzej Przybyło, President of the Management Board of AB S.A. “Digital transformation is accelerating, fostered by numerous government and EU programmes, including the National Reconstruction Plan. Europe is aware that without a digital revolution in the economy, it will not be able to compete with the US and China. This raises great challenges for the IT industry; however, the AB Group is able to address them successfully, and one of the ways to do it is through the recently completed bond issue. If the previous two years have taught us anything, it is that handling a surging demand requires preparation in advance and large investments, which we have carried out in a timely manner – we are going to keep that up in the future. We think and act with long-term perspective in mind, observing caution that is inherent in our organisational culture. This allows us to grow our market share regardless of external conditions,” highlights Andrzej Przybyło, President of the Management Board of AB S.A. As of now, other than the newly issued AB06 series, the AB04 bond series (ABE1023) with a face value of 80 million PLN are available on the market. In June this year, AB S.A. has redeemed 75 million PLN of AB03 series bonds (ABE0622) on their maturity date . In spite of the rapid upscaling and growth, the company has high liquidity. Based on the latest interim report, over the course of the last four quarters (from April 2021 to March 2022) AB Group managed to get close to a record 14 billion PLN in sales, while the company’s EBITDA has exceeded 220 million PLN. In Q1 2022 alone, AB Group recorded more than 3.3 billion PLN in revenue, an increase of 11.5% year-on-year, as well as an astounding 45% more compared to the same period in 2020. Thanks to the stability of margins based on distribution contracts, the unwavering focus on the CEE market (Poland, Czechia, Slovakia – with no exposure to the Eastern markets), favourable sales structure and the highest operating efficiency in the industry (based on the SG&A sales ratio), the AB Group’s EBITDA in Q1 2022 has grown by 26% y/y to 51 million PLN, more than double what it was two years ago. This allowed the company to generate 30.7 million PLN in quarterly net profit, marking a growth of 21% year-on-year increase and a 153% growth over Q1 2020. By the end of March 2022, the value of AB Group’s equity exceeded 1.1 billion PLN. This happened in spite of broken supply chains and lockdowns in China that delayed many deliveries – even in these unforeseen circumstances, AB Group pursued the strategy of ensuring maximum stock availability, increasing the value of its inventory to more than 1.8 billion PLN. Long-term bond financing supports the company in its efforts to prepare for handling the growing demand connected with the digital shift in the economic, administrative and social environment. Why we have been conservative when it comes to our balance sheet, so as to ensure a large safety buffer regardless of circumstances to be able to respond effectively to market opportunities as they arise. We maintain financial indicators at very safe levels, for example the net debt to EBITDA LTM is below 1.4,” says Grzegorz Ochędzan, Member of the Management Board of AB S.A. for Financial Affairs AB Group conducts numerous initiatives in the ESG area. As part of its environmental issues, the Company has been pursuing EMAS objectives by reducing the use of packaging materials and ensuring efficient recycling of electronic waste, as well as undertaking other initiatives. AB Group has been focusing on implementing digital document management systems and the concept of a paperless office, while designing and fostering circular economy initiatives. AB Group also undertakes numerous initiatives in the field of corporate governance, dialogue with its clients and customers, as well as cooperation within industry organisations to combat digital exclusion, support sustainable development of the industry and offer its insights regarding new legislation. The company is also responding to the needs of employees with a focus on a hybrid working model, promoting sports activities and fostering diversity in its internal policies. To focus on social issues, AB Group fosters IT education by sponsoring hackathons for youth, as well as training courses on technology. The company also supports various charities. AB Group company has actively joined the fight against the COVID-19 pandemic with a nationwide #AByrazem campaign, which resulted in nearly a thousand pieces of various equipment, including ventilators, sent out to those in need. These days, in the wake of the hostilities in Ukraine, it is also responding in many ways to the needs of the Ukrainian community with the #AByrazem for Ukraine campaign. In addition to in-kind and financial aid, Alsen, part of the AB Group, has been collecting used laptops, which after refurbishing are donated to Ukrainian children through the Ministry of National Education.