INVESTOR PRESENTATION FOR FULL YEAR 2016 RESULTS April 2017 - PowerPoint PPT Presentation

INVESTOR PRESENTATION FOR FULL YEAR 2016 RESULTS April 2017

Disclaimer  This document (the “Presentation’’) has been prepared for the sole purpose of the use at meetings with prospective investors to be held in connection with the private placement of bonds by SIA ExpressCredit, which, together with its subsidiaries, is further referred to herein as the “Company”.  This Presentation is of selective nature and is made to provide an introduction and overview of the Company’s business. Unles s stated otherwise, the information in this Presentation is provided from consolidated perspective, except for customer and loan issuance data which excludes operations under MoneyMetro brand, launched in October 2016.  This Presentation does not purport to contain all the information that a prospective investor may require in evaluating the Company. Participants to the meeting should read publicly available information regarding the Company as well as the full prospectus describing the bonds issue ( “the Prospectus’’). Prospective investors’ attention is drawn to the risk factors described in the section “Risk Factors’’ of the Prospectus.  This Presentation contains forward- looking information that may involve risks and uncertainties concerning the Company’s growth and profitability in the future. No reliance should be placed on any statements, estimates and projections regarding future performance or developments, including, without limitation, in relation to expected market developments, estimated financial figures of the Company, or any other forward-looking statements. Actual events or results may materially differ from those described in this Presentation. No one should therefore unduly rely on these forward- looking statements as they reflect only the judgment of the Company’s management at the d ate of this Presentation and are not intended to give any assurances or comfort as to future results. The facts and information contained in the Presentation might be subject to revision in the future. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.  None of the Company or any of its parents or subsidiaries or any of their directors, officers, employees and advisors nor any other person (i) accepts any obligation to update any information contained herein or to adjust it to future events or developments; (ii) makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this Presentation; (iii) shall have any liability whatsoever, in negligence or otherwise, for any loss howsoever arising, directly or indirectly, from the use of this Presentation.  This Presentation does not constitute an offer or an invitation for the sale or purchase of securities or assets in any jurisdiction, and neither this document, nor anything contained herein, shall form the basis of, or be relied upon in connection with any contract or commitment whatsoever. 2

Who we are?  2 nd largest non-bank consumer  Originally established in 2009 lender in Latvia 1 as a pawn broking chain  The leading consumer financial services chain in Latvia Loans 42% 58% issued by value, Pawn Consumer 2016 loans loans 300,000+ 279 390,000+ 65% Total unique registered Employees, Number of loans issued, Growth in net loans y-o-y, customers 31.12.2016. 2016 2016A 2,200,000+ 91 EUR 32.8m EUR 2.8m Total number of loans Branches, Value of loans issued, EBITDA, 2016A issued 31.12.2016. 2016 3 1) Based on reported annual revenue of licenced non-bank consumer lenders in 2015

What we believe in? Mission  Satisfy consumer needs for easily accessible financial services Vision  To create a new market segment in Latvia, one-stop shop for all consumer financial needs  To be the unrivalled leader in this segment by providing excellent customer service and product quality and maintaining perfect reputation Values  Simplicity, Accessibility, Dignity

What is our story? 2011 2015 2016 10.0 Payday Acquisition of Launch of a lending Riga City new brand 2013 Loans issued per quarter, EURm launched Pawnshop Secured 8.0 bonds 2009 2012 issued First pawn Consumer 6.0 shop lending opened launched 4.0 2010 2015 2015 50 th pawn Launch of a Rebranding shop new product 50 opened 2.0 0.0 • Impressive growth on the back of successful positioning, introduction of new products, and rebranding 5

Our customers 1 Business 18-19 Other related 60+ Lifestyle 13% 1% No emergency funding available 9% 8% expenses 20-29 27%  Households savings rate -2% in Latvia vs. 10% 9% Regular Loan 16% in the EU for 2015 2 50-59 bills 40% Age usage 20% 34% 24% 30-39 Key demand drivers Unexpected 40-49 expenses Low levels of income EUR 279 EUR 54  50% of working population have gross monthly customer salary < EUR 700 Consumer loan, Pawn loan, profile 2016 average 3 2016 average 4 Riga 32% 41% Female Reduced availability of financial services in Gender Region the regions 59% 68%  Number of bank customer service locations in Outside Riga Latvia down from 654 in 2007 to 265 now Male 1) Data as at 31.12.2016. Customer profile based on active customers as at 31.12.2016., except for loan usage which is based on survey results conducted in Banknote’s branches during 21.11. -25.11.2016. 6 Source: Eurostat, Central Statistical Bureau of 2) Gross saving divided by gross disposable income. Gross saving is the part of the gross disposable Latvia, Latvian Association of Commercial Banks income not spent as final consumption expenditure 3) Average loan size per customer in the portfolio as at 31.12.2016 4) Average loan size per issue transaction in 2016

Our customers 306 279 300 Sizable and growing customer base 245  15.7% of total population in Latvia, growing at 240 210 '000 c.2,300 per month 1 163 180  Growth driven by rebranding, use of new 113 120 marketing channels, and new product launch 52 48 47 44 39 33 60 0 2011 2012 2013 2014 2015 2016 Exceptional customer loyalty Total registered unique customers Active customers  More than 80% of loans (by value) issued to repeat customers 100%  Loyalty achieved by excellent customer 84% 90% 84% 83% service and attractive product structuring 78% 75% 80% 65% 70% Significant potential for cross-selling 60%  Only less than 25% of registered customers have used both types of loans 50% 2011 2012 2013 2014 2015 2016  Potential for cross-selling money transfers and loan products Share of loans issued to repeat customers by value 7 Source: Central Statistical Bureau of Latvia 1) As of 31.12.2016.

Regulation of our industry Consumer loans Pawn loans Regulatory framework rapidly evolving following industry Already well developed and stable regulatory framework, growth, stabilised in 2016: effective since 2011:  Minimum capital requirements and strict licensing  Minimum capital requirements and strict licensing  Cap on total effective loan costs  Advanced security procedures at pawnshop premises  No advertising promoting irresponsible borrowing  Stringent control procedures over pawn item origin Stringent internal procedures Adjustments to business strategy to successfully adopt to a regulatory already in place before required by change the regulation welcomes appropriate regulation Active cooperation with the Acting as a responsible lender regulator through industry implementing sustainable and association transparent business practices 8

Our market 2 Industry 8 280 Loan portfolio of 8 Consumer Loan portfolio, EURm Loan portfolio, EURm 170201 6 Latvian non-bank loans 133156186 210 6 4 lenders 4  Fast-growing 4 140 4 n/a segment 2 70 2  Banknote grows 0 0 even faster 201 EUR  3% market share 1 241 487m, 2016 H1 8 3 7 7 7 7 6 Loan portfolio, EURm Loan portfolio, EURm 7 38 Pawn loans 6 2 2 2 2 2 2  Stable segment 4 n/a 1 1 Consumer (incl. online)  Banknote is the 2 Pawn leading player Mortgage 0 0 Leasing, car title  26% market share 1 Source: Consumer Rights Protection Centre 9 1) Based on loan portfolio as at the end of 2016 H1 2) Loan portfolio data based on SIA ExpressCredit standalone net consumer and pawn loan portfolio excl. accrued interest

Our product Consumer loans 1 1 2 Pawn loans  Share from loans 58% 42% issued, 2016 Up to 95% of the pawn value  Loan size EUR 50-1,600 (jewellery, mobile phones, other electronics etc.)  Average loan size, EUR 279 2 EUR 54 3 2016 Up to 30 days (single payment loan) Up to 30 days (single payment loan)  Term 4-36 months (instalment loan) 2-24 months (instalment loan)  Weighted average 369 days 47 days term, 31.12.2016.  Interest rate per 6.0%-11.8% 9.9%-28.0% month Application and signing in the branch,  Process Application and signing in the branch online application possible 3 Money transfers with 1) Standard pricelist. Banknote has a special pricelist for seniors 10 2) Average loan size per customer in the portfolio as at 31.12.2016 3) Average loan size per issue transaction in 2016