Poland-based distributor AB Group has issued long-term bonds to “diversify development financing sources”, and reduce reliance on bank loans. As in the year 2014-2015, it has unsecured five-year debt securities with the nominal value of PLN 75m (€17.8m). Within the scope of the three issues of bonds, financial institutions acquired AB SA bonds with the total nominal value of PLN 245m (€58.1m), 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.
In Q1 2017 (3rd quarter of the financial year 2016/2017), the AB Group increased revenues by almost 9% yr/yr, to PLN1.85bn, generating EBITDA of PLN 24.3m (stable yr/yr) and net profit of PLN 13.2m (+6.2% yr/yr. 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,” says Grzegorz Ochędzan, AB Group CFO.
At the end of December 2016, the net debt yr/yr dropped by as much as 20%, he says. In Q1 2017 in comparison to Q1 2016, in spite of an increase in turnover, the net interest bearing debt was reduced by further PLN13.5m. During the last four quarters ended on 31 March 2017, the AB Group improved operating cash flow by over PLN 58m yr/yr, he says.