4finance investor presentation Pareto Securities Conference 21 January, 2016 0
Overview of 4finance European online and mobile lending leader 9M’ 2015 (4) KEY FIGURES, mEUR 2012 2013 2014 Data and technology driven company Interest income 76 149 221 229 Large scale Adjusted EBITDA (1) 38 71 83 79 - >EUR 2.8 bln loans granted since inception in 2008 - >4.3 million registered customers ( 9M’ 2015) Net profit 26 36 46 51 Diversification - Operations in 14 countries, key markets: CEE, Baltics, Nordics Total loans issued 313 538 805 791 - Largest single country share in net loan portfolio: 24% Net loan portfolio (2) 110 178 241 299 Solid financial performance Total equity 43 66 113 161 - Profitable every month since end of 2009 - 45% return on equity (9M’15) , high capital to assets ratio Net margin (3) 33% 24% 21% 22% Outstanding growth Capital to assets ratio (5) 35% 29% 35% 38% - Revenue tripled in 2014 vs. 2012 - EBITDA doubled during the same period Credit ratings Flexible business model Moody’s: B3 Positive S&P: B+ stable - 82% of assets are self-liquidating - 90% of expenses are variable (1) Adjusted EBITDA is defined as net profit, plus tax, plus interest expense, plus depreciation and amortization; adjusted for discontinued operations, non-cash impact of Highly experienced management team foreign exchange hedging, and goodwill write-offs (2) Gross loan portfolio less provisions for bad debts - Extensive banking, asset management, risk and audit experience (3) Calculated as net profit (reported) to interest income (4) As per 9M’2015 published u naudited management accounts (5) Total equity/total assets (2014 figure adjusted for effect of first USD bond defeasance) 1
Historical growth Group milestones - > EUR 2.8 bln total issued loans - Establishment of the Company - EUR 100m total issued loans - Active product development - > 1,300 employees - Financial investor Finstar attracted - First foreign expansion - 10 million loans granted (Jan ‘16) - > EUR 1bn total issued loans - 450,000 registered customers - 670 employees - > 4.3 million registered customers - Business amount tripled vs. 2008 - 4.2 million loans granted - New product roll-out: credit line - Served 100,000 customers - 2.3 million registered customers - New IT platform - 6.8 million loans granted - First “offline” loan granted - 3.8 million registered customers - > 10,000 loans issued per day - Moody’s and S&P ratings assigned for - No. of loans issued tripled - > 4,000 registrations per day compared to 2009 the first time - 1 million registered customers 2008 2009 2010 2011 2012 2013 2014 2015 {acquisition} Entries to new markets and brands Number of countries: 2 2 4 4 10 10 14 3 7
Clear and simple product structure Single payment loan Instalment loan New product: credit line • n/a (initial launch 09/2015) 67% 33% % in portfolio (1) • EUR 5 –2’010 • EUR 50 –3’846 • Limit up to EUR 3’000 Loan amount • Up to 30 days • Up to 36 months • Open-ended revolving credit line Term • 307 EUR • 686 EUR • n/a Average loan size (1) • Monthly interest payments • Minimum monthly repayment (MRP) • Single fee payable at maturity Fee structure • Repayment in multiple instalments • Withdrawal fees • Monthly interest rate: • Nominal annual interest rate: 61.9% – • Monthly interest rate: Interest rate 9% – 35% (2) 108.0% (2) 8.5% • Flexible payment options as long as • Option to reset scheduled repayment by • Option to extend up to 30 days MRP is met a month Extension • Extension fee payable before extension • Customers can change their repayment • Extension fee payable before extension date • Latvia, Lithuania, Finland, Sweden, • Latvia, Lithuania, Finland, Sweden, • Launched in Finland Poland, Denmark, Georgia, Spain, Markets Poland, Denmark, Armenia Czech Republic, Bulgaria, Romania, Argentina, Mexico • Websites (mobile / tablet / web) • Apple & Android native apps Distribution • Online / mobile • Phone call and SMS channels • Offline: agents, loan shops and other partners (1) Gross performing loan portfolio, as of 30/09/2015 3 (2) Max term and max loan amount pricing
Customer profile Client split by gender Client split by age Most common customer characteristics: 9M ’ 2015 9M ’ 2015 • Has a bank account • Uses financing for lifestyle 23% • Expenditure matches monthly choices or necessities 18% • Not willing to pay more for 17% 17% income 13% • Little or no savings value-added services 6% • Limited credit history 6% • 78% are repeat customers • Employed + self employed (6 M’2015) 18-20 21-24 25-29 30-39 40-49 50-59 60+ Loan usage (1) Sessions by device, online & mobile Sep 2015 4% Emergency/unexpected expenses 3% 1% 6% Desktop Pay regular bills (house, utilities, food) 15% 34% Mobile: Android 16% Mobile: iOS Debt consolidation/repayment 12% Mobile: other Tablet 77% Maintaining my lifestyle (e.g. holidays, 33% shopping, trips, etc.) Other (wedding costs, medical expenses, etc.) 4 (1) Loan usage distribution in Latvia, smscredit.lv. Research agency: SKDS, 2015
Business process Marketing Underwriting Process • • • Customer Scorecards Customer Care • • Acquisition Credit bureaus Debt Collection • • • Distribution Proprietary Fulfillment Channels database Data IT Operational Risk Compliance Finance Legal Business Analysis 5
IT platform Modern Secure & scalable Efficient • Latest technologies • 24/7 monitoring • Centralized IT function • Highly integrated into the • Regular external audits • Cloud-based servers • Infrastructure scaled by code • Full automatization business Digital marketing Anti-fraud Customer gets the tools loan The average loan Payment Loan application issue time: 4 min systems • Search engine 54 sec optimization • Paid ads • Targeting Risk tools ! Client Fully integrated service platform Credit • Websites Paying bureaus Partner • Mobile back the systems • Apps • Big data utilization loan • Offline partners • Data mining & econometric models 6
Strategy for sustainable growth • Continuous operational • Maintain market leadership in improvements, including established core markets adaptation to new regulation Strengthening foundation • Expansion to Latin America, • Big data: leverage existing Africa and Asia proprietary database for product development Sustainable Leveraging on Geographical growth technology expansion • Developing operations in recently entered markets: Romania, • Marketing Technology: for better Armenia, Argentina, Mexico targeting and product offering • Continuous development of scoring Product roll-out systems • Electronic wallet, card payment • Line of credit already launched in Finland, planned in other markets 7
Financial Review 8
Highlights of 9M 2015 results Net profit Revenue • Strong performance across the business • Loan issuance up 33% 229.3 +39% +29% • Revenue up 39%, growth in all countries 51.3 • Net profit up 29% to EUR 51.3 million 39.7 • 164.5 Continuing to invest for the future • People, platforms, data analytics • Marketing technology • Diversifying the business • Launch of third product: Line of Credit • Launch of Vivus brand in Argentina and now Mexico mEUR mEUR • Strengthening management team • Appointment of experienced Chief Risk Officer 9M 2014 9M 2015 9M 2014 9M 2015 9
Income statement INCOME STATEMENT, M EUR 9M ’2014 9M ’2015 % Change Interest income 164.5 229.3 39% Interest expense (16.4) (21.1) 29% Net interest income 148.1 208.2 41% Net impairment losses on loans and receivables (41.7) (57.0) 37% General administrative expenses (58.1) (89.0) 53% Other (expense)/income (0.3) (2.9) >100% Profit before tax 48.0 59.3 24% Tax (10.0) (13.3) 33% Net profit from continuing operations 38.0 46.0 21% Discontinued operations, net of tax 1.7 5.3 >100% Net profit 39.7 51.3 29% Cost to income ratio % 35% 39% Net Margin, % 24% 22% 10
Balance sheet BALANCE SHEET, M EUR 2014 9M'2015 % Change Loans and advances 241.4 299.1 24% Cash and cash equivalents 33.7 47.5 41% Other assets 94.9 77.1 (19%) Total assets 370.0 423.7 14% Loans and borrowings 231.6 226.9 (2%) Other liabilities 25.4 36.2 42% Total liabilities 257.0 263.1 2% Total equity 113.0 160.6 42% Total equity and liabilities 370.0 423.7 14% KEY RATIOS 2014 9M ’2015 Capital/assets ratio (1) 35% 38% Capital/net loan portfolio 47% 54% Interest coverage ratio 3.5x 3.7x Return on average equity (2) 54% 45% (1) 2014 figure adjusted for effect of Notes defeasance 11 (2) RoAE based on net profit from continuing operations
Diversified loan portfolio Net loan portfolio (1) , mEUR Net loan portfolio (1) by country, 30/09/2015 299 241 178 2% 1% 110 Poland 6% Latvia 24% 2012 2013 2014 9M'2015 8% Lithuania Sweden 8% Portfolio split by average loan amount, EUR, Georgia 30/09/2015 Finland 8% 27% Spain 22% 17% Denmark 10% 13% 10% 9% Czech Rp. 9% 7% 16% 3% Other 12 (1) Gross loan portfolio less provisions for bad debts
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