Euroloan Group Plc Annual Review

Transcription

1 Euroloan Group Plc Annual Review

2 CONTENT EUROLOAN IN FROM THE CEO 6 BOARD OF DIRECTORS 10 EXECUTIVE STEERING COMMITTEE 12 CUSTOMER EXPERIENCE 13 BOARD ANNUAL REPORT 15 CONSOLIDATED FINANCIAL STATEMENTS 30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 33 ACCOUNTING PRINCIPLES OF FINANCIAL STATEMENTS 36 CORPORATE GOVERNANCE 39 RISK MANAGEMENT 42 PARENT COMPANY S FINANCIAL STATEMENTS 51 NOTES TO THE PARENT COMPANY S FINANCIAL STATEMENTS 53 SIGNATURES TO THE FINANCIAL STATEMENT 56 AUDITOR S REPORT 57 EUROLOAN GROUP PLC ANNUAL REVIEW

3 EUROLOAN IN 2014 Euroloan Group PLC (Euroloan) is a rapidly growing international group specialized in financing and financial technology (FinTech). The Group s headquarters are located in Helsinki, Finland, with offices in Stockholm, Sweden and Warsaw, Poland. Euroloan has developed the most efficient financing business models and systems in the market. Euroloan s fully automated and internationally scalable cloud banking services provide real-time credit solutions for consumers and small-to-medium size businesses. Euroloan Group PLC also provides a fully automated invoicing and collection service through its subsidiary Cobro24, enabling cost-effective management of receivables over their entire life cycle. Euroloan has consolidated its market position and increased its market share continuously from the time the company was established in Key events of the year: The Group launched its popular automated Revolving Credit Line financing system enabling the creation of a virtual credit card in Sweden. The credit account is created and managed in real-time via the electronic my.euroloan service. The Group issued new share classes (A, B, C and D class). Lending volumes of Q1 grew by 50% from the previous quarter of Q4/2013. Mrs. Riitta Salonen, Mr. Heikki Palosuo, Mr. Timo Saini, Mr. Jonas Lindholm and Mr. Tommi Lindfors were the selected Board Members appointed by the Annual Shareholders Meeting. Founding member of the Group, Tommi Lindfors, was appointed Chairman of the Board and former CFO Jonas Lindholm was appointed as Group CEO. The operations were streamlined through co-operation negotiations which resulted in terminating the employment contract of one member of staff. The Group s share issue of A, B and C class shares was oversubscribed in Q2/2014 adding EUR 7.6 million of new equity and strengthening the balance sheet considerably. Group chose new values Fast, Fair and Fresh. Digna IT was awarded Microsoft Gold Partnership, which degree of proficiency only one percent of Microsoft partners worldwide have attained. 4 EUROLOAN GROUP PLC ANNUAL REVIEW

4 An e-commerce payment platform was developed for over 40 partners. Their customers can now pay for their goods and services using Euroloan s credit in webshops and storefronts all over the country. Collection and systems business customers now number over 50 in Finland, including many of the largest cities and municipalities, banks, finance companies, insurance companies, pension insurance companies and collection companies Turnover amounted to EUR 9,9 (7,4) million. Other income was EUR 0 (2,6) million. Total income remained at 9,9 (10,0) million, decreasing 1% from the previous year. Operating profit grew by 39% and amounted to EUR 2.5 (1,8) million, that is, 25,7% (24,6%) of turnover. Operating profit excluding non-recurring items was EUR 2,5 (-0,8) million. The Group s equity increased by 72% to EUR 17,7 million (EUR 10,3 million). The equity ratio increased to 39 % from 32 % the previous year, growing by 22%. The total balance sheet grew by EUR 13,0 million during the year, or 41%, to EUR 45,1 (32,1) million. The balance grew thanks to the 90% growth in the stock of consumer receivables, reaching a new record of EUR 29 million (EUR 15 million). The EUR 15 million bond issue in June failed to raise sufficient liquidity to continue rapid growth according to budget. This resulted in management focus shifting from lending volume growth to funding and refinancing the operations, which had a considerable negative impact on the revenues and profit of The Group s wholly-owned subsidiary Euroloan Finance AB s application to the Swedish financial service authorities to become a credit market company (Kreditmarknadsbolag) was declined in December. The strategy to fund operations through state-guaranteed deposits from the public remains intact. At the end of 2014 Euroloan had 188 shareholders, the number increasing considerably from 25 shareholders at the end of Financial indicator Turnover, million Equity, million Equity Ratio % Total Balance, million 50% 50 40% 40 30% 30 20% 20 10% 10 0% EUROLOAN GROUP PLC ANNUAL REVIEW

5 FROM THE CEO The financial sector as a whole is continuing the trend toward more efficient and automated services. This can be seen when traditional banks are repeatedly downsizing their staff and physical branch network to cut costs. Cutting down branch networks is expensive, and they also risk losing customers in the process. It will also require enormous efforts on the part of the traditional banks to transform to a new way of operating in a networked environment. The advantage of never having to build a branch network with the associated costs is obvious, and the emergence and growth of alternative financing companies is a symptom of this fundamental change. At Euroloan, the core of our strategy and operations is to maximize the automation of our fully scalable, cloud-based web services. We are at the forefront of a new generation of web-based financial services, where we take efficiency to a completely new level utilizing the full scope of modern systems and innovative marketing and sales tools so that we can rapidly scale our business, gain new customers and offer them fully personalized services without once having to meet them in person. We are already where others aim to be in the future. We are already where others aim to be in the future. - Jonas Lindholm, CEO The rapid pace of development that has become the trademark of Euroloan continued throughout the whole year of We set out in the beginning of the year for the first time with one team in one group after consolidating the ownership of all subsidiaries in late This had a big positive impact in focusing our business on the essentials and in the way everyone cooperates and helps each other when needed. We always strive to take good care of the wellbeing of everyone on our staff, and based on the feedback we have received from our personnel we are moving in the right direction. Our common values were refocused based on the input of our whole staff, and we are now all committed to taking our new Fair, Fast and Fresh message out to the world a year of new records Already in the first quarter of 2014 we grew our volumes by 50% compared to the previous quarter. January alone showed a volume growth of 36% compared to our previous record in December 2013, and totaled EUR 2,6 million in lending volume. By October 2014, the monthly lending volume was already EUR 3,8 million. Our operating profit grew by 39% to EUR 2,5 million, proving that with our scalable business model additional volume will also scale our profits. The Group s equity grew by 72% during 2014, which also increased the equity ratio by 22%, although the balance sheet total grew by 41% at the same time. Euroloan Group successfully issued new shares (A, B and C series) by a total value of 7.6 MEUR, further increasing the Group s already strong equity base. We are now exceptionally solid as a company, which has been a great asset when 6 EUROLOAN GROUP PLC ANNUAL REVIEW

6 negotiating funding, for example. We also fulfill the Basel III and CRD IV capitalization requirements for financial institutions with a healthy margin. Onetime financing costs related to our oversubscribed share issue affected the net result of the financial year, but the additional equity has strengthened the Group s capital base and enabled more and better alternatives for funding. We have gained many new investors during 2014, and the total number of shareholders in the Group is now over 180, with many of the new shareholders being our own personnel. We thank you for your confidence in us and welcome our new shareholders looking forward to a prosperous future together! We believe in openness and good and timely information availability for investors. To ensure this, the Group regularly publishes press releases about significant events in addition to our extensive and detailed annual reviews and financial information. We put a lot of effort in producing the information and hope that we have contributed to our investors making informed and thus better decisions. In a business where the main raw material is money, funding is always a central issue. In our systems, we have an engine that could run with much higher speed than today. Fast growth ties up capital and requires a continuous influx of new liquidity. When we have sufficient funding, we have no problem in reaching very high volumes quickly, as we showed in October with a new volume record, up 123% from the corresponding volume in October We were able to secure 30% more funding than before, in addition to refinancing expiring bonds. Our Group board has been central in bringing our business to a new level, and has contributed greatly in funding arrangements and investor contacts. This has enabled us to grow our stock of consumer receivables to a new record of EUR 29 million compared to EUR 15 million at the end of the year This is important as most of our money is made through these receivables. To ensure further growth, the end of the year was spent on securing sufficient funding for the Group. In February 2015, after the end of the financial year, we were able to secure a further 15 MEUR in additional funding, which will enable us to reach very ambitious goals already during the first half of the year. We believe that managing our own receivables in collection gives us a significant advantage both in terms of cash flows from customers and also in making ever better decisions in our lending business. We strive to keep incoming cash flow on a high level, which reduces the need for expensive external funding and improves our capital turnover rate. Our portfolio of old receivables (in collection) generated record cash flows toward the end of the year thanks to improved and intensified processes, and the trend looks to continue as positive for the coming year. Microsoft Gold Partner Our automated, cloud-based financing systems have been running with good stability and few quality issues. The majority of our personnel have been involved in developing the business model, processes and systems. Our system development, quality, IT security and project management teams are stronger than ever before. Thanks to their unrelenting effort, we became a Microsoft Gold Partner in June Quoting Microsoft: To earn Microsoft gold competency, partners must successfully demonstrate best-in-class expertise. These competencies are also evidence of the deepest and most consistent commitment to a specific, in-demand business solutions area. Only one percent of Microsoft partners worldwide have attained this degree of proficiency. The next goal is achieving the ISO/IEC 27001:2013 Information Security Standard certification. Changes in the organization The board of directors saw some changes as the new board elected by the annual general meeting included five members instead of the previous seven. We thank Mr. Pauli Hentunen, one of the founders of Euroloan, and Mr. Tapio Vuojärvi for their contribution. Other board level changes include previous CEO, Mr. Tommi Lindfors taking over as Chairman after Timo Saini, who has stayed on as Board member. As Mr. Lindfors took over as Chairman, I took over the CEO s responsibilities as well as working as a board member. The Group s business was focused more toward our core business, consumer finance, and the organization was restructured in early May. As a result we now are more streamlined, professional and aligned toward our common goal of growing our core business. EUROLOAN GROUP PLC ANNUAL REVIEW

7 Corporate Customers Our corporate customers function handles partners (merchants) as well as collection services and collection system clients. We developed an e- commerce payment platform for our partners, who now number over 40. The customers of our partners can now pay for their goods and services using Euroloan s credit in webshops and storefronts all over the country. In our collection and systems business our customers now include some very prominent organizations among our 50 clients in Finland, including many of the largest cities and municipalities, banks, finance companies, insurance companies, pension insurance companies and collection companies. Sales and marketing In our consumer business we have been able to improve our customer acquisition process, so that the cost of new customers has dropped significantly by the end of the year compared to earlier. The sales focus has moved toward more affluent customers with better credit ratings. These, combined with major improvements in marketing and customer retention that are in progress, will potentially have a very big positive impact in the future. A new corporate look was launched with a completely reworked Euroloan.com website, while making several big improvements on customer channels during the year. We have also introduced loan brokers as sales channels during Markets and competitiveness The operating environment has been challenging, not least because of continued insecurity of economic development in Finland, the trade embargo on Russia and general market fluctuations. On the positive side the effects of last year s law changes in Finland have affected many competitors, some of which have ceased operations, while others have been forced to do major changes in their business processes. This has improved our relative position in the market, and we have complied fully with the new legislation with our new business model. Credit losses and payment defaults have continued to drop thanks to the great work of our credit risk and analysis function. They have really improved our profitability through continuous improvement of our processes, and this is what makes our business model so outstanding compared to others, especially with rapidly growing business volumes. The positive credit register we joined as a founding member in 2013 has also had a beneficial impact, improving credit decision quality. Our analysis tools and the work done by the team have been a great asset to us in business development and optimization, and we will continue to develop our processes in 2015 with more resources dedicated to the task. We have been working hard on improving profitability also in the Polish and Swedish markets, and we are now confident that with all the improvements in place we are able to expand volumes significantly in both markets with low risk and good profitability, as we now have additional funding available. We opened up our continuous credit service in Sweden in March, and it has been very well received compared to our previous service. Credit market company license A lot of effort was put on the application for a credit market company license in Sweden, which unfortunately was rejected at the end of the year. The massive material with many iterations became a liability in version control, as the SFSA could not follow all the changes made. Many people contributed to different parts of the very extensive material, and a lot of the work done has benefited us in any case through improved processes and better documentation. Now we have the opportunity to submit a clean and clear application without legacy issues, and we have most of the material ready made to a very high standard. We recruited a compliance officer, who has aided us in making clear rules that help us fulfil external requirements for financial institutions as well as work better together. It is important to note that, despite the big benefits that can be gained through the credit market company, we have been able to operate and grow for the last seven years profitably without it and are very able to do so also in the future. The Group s long-term strategy to fund its operations through deposits from the public remains intact, but the process will be delayed from the previously estimated schedule. Moving into 2015 Tommi Lindfors, our previous CEO and present Chairman, concluded last year by stating the three things needed to operate and one thing to succeed in our largest business area, Consumer Finance. For operations we need to have access to 8 EUROLOAN GROUP PLC ANNUAL REVIEW

8 cheap and adequate funding (product), fast and internationally scalable systems (factory) and innovative sales, service & marketing (sales). What we need in order to succeed is all of us, the team. We have made tremendous leaps forward in all of these areas, and we have never been in better shape than we are moving into I want to thank each and every one of our employees for their effort during the past year, and our new and old investors that have enabled our growth story. We have, again and again, achieved great things during a single year, thanks to all of us at Euroloan. Jonas Lindholm CEO of Euroloan Group PLC EUROLOAN GROUP PLC ANNUAL REVIEW

9 BOARD OF DIRECTORS The Board of Directors of Euroloan Group PLC on December 31st 2014: Mr. Tommi Lindfors, M.Sc. (Econ), born in 1975, Chairman of the Board Tommi is a co-founder and Chairman of the Board of Euroloan Group PLC, formerly the CEO of of Euroloan Group PLC and Euroloan Consumer Finance PLC. He has experience in international financial services, real estate investment and entrepreneurship. Previously he worked at ABB; within ABB Group, ABB Credit, and ABB Financial Services; and in OP-bank Group. Tommi is the Chairman of the Board of Group companies Euroloan Consumer Finance PLC and Crédito Cobro Ltd and is a leading expert in business development and investment. Mr. Timo Saini, M.Sc. (Econ), born in 1945 Timo is an experienced business leader. He started his career at Unilever Finland Oy and has worked in managing director positions ever since, at Yhtyneet Kuvalehdet Oy, Talentum Oyj and as CEO of Oy Valitut Palat Reader s Digest Ab, in total for approximately 20 years. Between 1997 and 1999 he was European Vice President at Reader s Digest Ass. Inc. located in London. Since 2002, Timo has worked as a board member in several companies, often as chairman. Many of his board memberships are or have been in family businesses and in companies driven by private equity investors. He has special skills in board evaluation and corporate governance. He is also a popular speaker and writer in developing Board performance. Mr. Heikki Palosuo, LL.M., M.B.A, born in 1951 Heikki has over 30 years of experience in banking and finance. He has managed or taken part in the establishment of different banking entities in Scandinavia and the U.S. Heikki held various positions at Skopbank during the years , including in-house lawyer, head of letters of credit, SVP in corporate finance, New York branch manager and Executive VP. During the years , Heikki worked for Danske Bank, Finland, holding the positions of Helsinki branch manager, country manager and head of corporate finance. Since 2001, Heikki has worked on versatile financial advisory assignments, M&A and debt and equity capital market transactions as Senior Advisor at Corporate Advisor Group Oy, and as chairman and owner of Northeast Investments and Capital Ltd. He has served as a board member in various companies. 10 EUROLOAN GROUP PLC ANNUAL REVIEW

10 Mrs. Riitta Salonen, M.Sc. (Econ), born in 1947 Riitta has a remarkable career at what is now Danske Bank. She started her career as a partner in Inter Consulting Ky (in ) and has since worked at Postipankki (Deputy General Manager, Capital Markets), Leonia Corporate Bank and Sampo Bank (Senior Vice President and Head of Capital Markets) and Danske Bank (Senior Vice President and Head of Debt Capital Markets Finland). Today Riitta is a Board Member of Gaia Network Association as well as Euroloan Group. She is a leading professional with an exceptionally broad knowledge of capital market and corporate finance products, such as the origination and syndication of domestic and euro bonds, syndicated loans, equity issues, swaps, asset securitization, corporate finance advisory, privatization, and IPO s and bank s own funding. She also has an excellent contact network with clients in the Nordic area and investment banks. Mr. Jonas Lindholm, M.Sc., born in 1971, Chief Executive Officer Jonas has over 25 years of experience from working with strategy and finance for large international companies. He has been a board member leading the development of the group and was appointed CEO for Euroloan Group in May Before joining Euroloan Group as Executive Vice President and Chief Financial Officer in 2010, he worked as Vice President at Pöyry, leading high-profile projects for strategic and financial management of international energy, industrial, infrastructure and financial sector clients, and in public sector projects. Earlier he worked for KPMG as Director and Head of Business Area Risk Advisory Services, at Oxford IPC Worldwide as Partner and Vice President, Europe, and in several leading positions within ABB Financial Services and ABB Group. Jonas has a number of Board positions, and he is a founding member holding a Fellowship with the Oxford Leadership Academy. According to the internal audit of 2013, there are no conflicts of interest related to the board members or the CEO. During the year, the Group made managerial appointments. These aim to secure efficient implementation of strategy related to the new operating model. EUROLOAN GROUP PLC ANNUAL REVIEW

11 EXECUTIVE STEERING COMMITTEE The Group s Executive Steering Committee: Mr. Jonas Lindholm Born 1971 Group Chief Executive Officer Mr. Samuli Korpinen Born 1977 CEO Consumer Finance Mr. Seppo Sairanen Born 1957 Head of Corporate Customers Mr. Eric Sederholm Born 1965 Head of Deposits Mr. Risto Illukka Born 1975 Head of Consumer Business Mr. Joachim von Schantz Born 1970 Chief Operational Officer Mrs. Pia Ali-Tolppa Born 1961 Chief Financial Officer 12 EUROLOAN GROUP PLC ANNUAL REVIEW

12 CUSTOMER EXPERIENCE Euroloan began measuring and managing customer satisfaction in The best service and customer experience result from systematic leadership. During the last few years, Euroloan has put a lot of effort in improving our customers experience and easing the use of our web and mobile sites. Clear and easily available information, no hidden costs, a high service level and instant availability have gained us our customers continued trust. Euroloan also emphasizes excellent customer service and continuous customer service agent training. As a result, customer experience has developed significantly year by year. Customer satisfaction is measured by using the industry standard Net Promoter Score (NPS). Euroloan customer experience has risen above several banks and is now challenging large European corporations. 78% of Euroloan customers rate customer service 8-10 on a scale of Customer feedback is important to us and we are using it to improve our service to provide customer service that is fast, fresh and fair, and in accordance with our company values. The ultimate objective of the customer service is delivery of an extraordinary service standard along with highly competent service- and problem-solving knowhow, for example by emphasizing first call resolution. Our customers are able to solve their problem via one phone call, one or chat conversation. Multi-channel customer service is simultaneously a challenge to the company, and is a lucrative and trendy approach to customer service. By providing better customer service Euroloan improves our overall brand awareness and believes that this investment will result in greater customer loyalty and more recommendations to others. Three out of four customers recommend Euroloan to their friends and colleagues. EUROLOAN GROUP PLC ANNUAL REVIEW

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14 BOARD ANNUAL REPORT The year 2014 was very successful by most measures for Euroloan. Considerable growth was achieved during the year both financially and in team competence. Financially, the Group grew especially in terms of operating profit (+39%), turnover (+33 %), lending volume (+83%), loan receivables (+90%) and balance sheet total (+41%). The Group s equity grew by 72%, with a corresponding increase of 22% in the equity ratio, which was strengthened from 32% to 39%. Market expansion, system investments and applying for a Credit Institution license, which can all be seen as investments in future profitability, had an impact on net profit, which was EUR After extensive testing, the markets in Sweden and Poland showed that volumes can be increased profitably both in terms of customer acquisition and payment behavior. In contrast with earlier years, both legislation and the operating environment remained relatively stable during 2014 in the Group s largest market, Finland. This allowed our team to concentrate on growing the business and on building capacity for future growth. Law changes in Sweden required lending companies to obtain a license under the Swedish Financial Services Authority (SFSA) and the Group s Swedish subsidiary ELCF Sweden AB filed the application in December. In Poland the operating environment was relatively stable during the year. Most of the team resources were focused on the Group s largest business area; consumer finance. The work done included strengthening the proprietary cloud based banking systems, building international operations in Sweden and Poland and reducing credit loss levels through improved customer selection and scoring. All three areas improved considerably during In line with the Group s strategy to secure funding through deposits from the public, the business area Savings & Deposits continued the application process started in 2012 to obtain a credit market company license in Sweden. Core legislation and regulation for financial institutions changed several times during the process exacerbating the changes required to ensure compliance. The application material sent in swelled to over 2500 pages, which was no longer manageable, and which complicated the process. In December the SFSA was asked to clarify the situation. The SFSA made a decision not to approve the application in the current format, and highlighted several areas that should be improved, including internal inconsistencies in the massive material, the need for a clearer and more up-to-date plan with fewer changes over time, a more down-to-earth description of risk management and risk control processes and a more proactive approach. The approach to these areas is now being revised. The Group s long-term strategy to fund its operations through deposits from the public remains intact, but the process will be delayed from the previously estimated schedule. Business area Corporate Customers built a strong foundation for growth in following years. Focusing on partner sales and online shop integrations resulted in 45 new merchant partners, who are offering our credit account and payment facility for consumers in their traditional stores. The e- commerce payment platform for online stores was finalized in December and five new partner agreements were signed very rapidly. During the financial year, the consolidated Group turnover amounted to EUR 9,9 (7,4) million. Other income was EUR 0 (2,6) million. In 2013, other income included a non-recurring item of EUR 2,6 million related to an internal transaction at market price of customer receivables. Total income remained at EUR 9,9 (10,0) million, decreasing 1% from the previous year. The operating profit grew by 39% and amounted to EUR 2,5 (1,8) million, that is, 25,7% (24,6%) of the turnover. The operating profit excluding non-recurring items was EUR 2,5 (-0,8) million. The total balance sheet grew by EUR 13,0 million during the year, or 41%, to EUR 45,2 (32,1) million. The growth came mainly from consumer lending activities with both equity and bond emissions financing the growth. The Group s intangible assets related to information systems totaled EUR 4,3 (3,1) million. The Board will actively follow the development of the banking and financial sector tax and legislation changes in Finland, Sweden and Poland. Increasing costs and tightening regulations are a challenge, particularly for banks with an extensive physical branch network, limiting their ability to operate profitably. EUROLOAN GROUP PLC ANNUAL REVIEW

15 As outlined in the Group s FinTech (Financial Technology) strategy, the Board of Directors strongly believe that the demand among private individuals for flexible consumer credit solutions will increase significantly over the next several years, especially due to increasing e-commerce. There is great potential in Euroloan s proprietary banking software and the service model, which is based on online services and developing leading technology with readiness for rapid international scalability. Market Development Euroloan Group s main markets in 2014 were Finland, Sweden and Poland. In Finland, the Group operates in the unsecured lending market, the collection market and the financial systems market. In Sweden, Euroloan operates in the unsecured lending market and plans to operate in the savings and deposits market. In Poland, the Group operates in the unsecured lending market. Market entry and volume allocation is prioritised based on estimated profitability, risk, market entry cost and growth potential. The market with the best parameters will be given higher priority in systems development and allocation of resources as well as financing. The long-term strategic target is expansion in the major European markets, as is permitted by the organic growth rate, market potential and availability of capital. Euroloan targets the EU market, seeking to capture a reasonable share of the market in each country at limited cost. An initial, small-volume test phase will be conducted in each market and, if the results are satisfactory, more resources will be allocated to the market. As the Group is primarily focused on consumer finance, representing 84% of revenues, the bulk of this section will focus on unsecured lending. Macroeconomic overview GDP development 10% 5% 0% - 5% - 10% Historical GDP development Finland Sweden Poland European Union The GDP growth in both Sweden and Poland has been positive in recent years. In contrast, Finland has experienced a slightly negative GDP growth for two consecutive years and GDP growth in the European Union has on average stagnated at around 0%. Although the financial crisis had an adverse effect on Finland and Sweden, the recovery has been strong, especially in Sweden which experienced growth of 1.6% in Poland has experienced a continuously positive GDP growth since 2004, ranging between 6.8% and 1.6%. Unemployment rate 1 Source: Eurostat 16 EUROLOAN GROUP PLC ANNUAL REVIEW

16 20% 15% 10% 5% 0% Historical unemployment rates 2 Historically, the unemployment rates in both Finland and Sweden have been relatively low. Both countries were somewhat affected by the financial crisis, resulting in unemployment levels (from 2009 onwards) remaining stable at around 8%. Poland, on the other hand, had fairly high unemployment rates in (e.g. 19% in 2004). The unemployment levels declined before the Finland Sweden Poland European Union (28 countries) crisis but increased since2008 to 10% in In 2013, all three countries in which the Company operates had lower unemployment levels than the unemployment level in the European Union as a whole. Inflation Historical inflation rate 3 Finland Sweden 5% 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% % Poland European Union 5% 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% % The inflation rates in Poland and Finland have been more volatile than the rate in Sweden. The inflation in Sweden during the period peaked in 2008 but subsequently gradually decreased to the low rate of 0.4% in Finland s rate has been slightly more unstable, ranging between 0.1% and 3.9%. The inflation rate in 2 Source: Eurostat 3 Source: Eurostat EUROLOAN GROUP PLC ANNUAL REVIEW

17 Poland has, over time, on average been higher than the rates in Sweden and Finland, but the rate substantially decreased in 2013 to 0.8%. Consumption Historical household consumption growth 4 20% 10% 0% - 10% - 20% Finland Sweden Poland European Union Poland experienced a notable decline in household consumption in 2009 as a consequence of the financial crisis. However, there has been a strong recovery in consumption in the country since the crisis, with positive growth in every year since then. Finland s consumption level has also been stable over the past 10 years. The country experienced a decline in consumption growth in 2009, yet it never fell below zero. Consumption growth increased following the crisis, but decreased to around 1.5% in 2013 due to uncertainties in the Eurozone area. Sweden has in recent years had a relatively stable rate of household consumption. Even though the global financial crisis of 2008 had an effect on the country s consumption level in 2009 (and to some extent in 2008), the recovery has since then been strong. Government finances 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Historical government debt (% of GDP) 5 Finland Sweden Poland European Union The debt levels as a percentage of GDP in Finland, Sweden and Poland have been lower than the average levels in the European Union the past 4 years. Finland has increased its debt ratio in the past 4 years, the ratio reaching 56% in Sweden has experienced the lowest debt level, which has remained fairly constant in the past few years except for an increase of two percentage points in 2013 to 38.6%. Poland s debt level has also remained constant at around 55%. Unsecured lending market overview 4 Source: Eurostat 5 Source: Eurostat 18 EUROLOAN GROUP PLC ANNUAL REVIEW

18 Unsecured loan stock in Europe CAGR - 1,5% EURbn The unsecured loan market in Europe has decreased with a CAGR of 1.5% over the past 6 years measured in Euro. The current unsecured loan stock in 2013 amounts to EUR 1,061 billion EURbn EURbn Unsecured loan stock in Finland 7 CAGR 4% e 2014e Unsecured loan stock in Sweden CAGR 6% In contrast to the development in Europe, the Finnish loan stock has increased in e with a CAGR of 4%. In 2014 the unsecured loan stock is expected to be EUR 13.5 billion. Also in contrast to the development in Europe, the Swedish unsecured loan stock has increased since 2005, with a CAGR of 6%. In 2013, the unsecured loan stock amounted to SEK 197 billion (EUR 22.8 billion). Looking at the history of the Swedish unsecured consumer lending market, growth between 2005 and 2009 was mainly due to supply side expansion, as local banks expanded and foreign operators entered the market. With the onset of the financial crisis, the market decreased slightly, with banks and other market participants reducing their risk appetite. Since 2010, growth has slowed, the growth mainly being driven by an increase in households disposable income. Going forward, the Group expects the market for unsecured lending to grow in line with economic growth, increasing disposable income and a strong demand for consumer lending. The initial test phase in Sweden was completed in early 2014, and the number of customers increased during the year, and there was a contin- The mortgage market declined significantly due to the new regulations relating to for- 6 Source: Credit Agricole - Consumer credit market in Europe 2013 overview. 7 Source: ECB. 8 Source: ECB EUROLOAN GROUP PLC ANNUAL REVIEW

19 uous improvement in the credit assessment and scoring process. In 2013, deposits from Swedish households increased by 5.7 % to SEK 1,055 billion (EUR 122 billion). In the second quarter of 2014, deposits amounted to SEK 1,119 (EUR 123 billion). The consumer finance market in Poland grew in 2013 and unsecured loan stock amounted to approximately EUR 30 billion (PLN 127 billion) was the first year since 2008 where there was no decrease in the total unsecured loan stock. This was due to the following: eign currency mortgages. Previously, mortgages in Euro and Swiss francs were very common. Changes in the Polish financial supervisory regulations, which allow banks to offer their customers larger loans with more flexibility. Increased competition on the short-term loan market. During 2014, the Polish financial services market experienced changes, such as mergers and regulatory developments. Euroloan started its lending operation test period in Poland in December 2013, with a relatively modest volume with respect to the scope of operations. Consumer credit per capita at the end of 2012 in Europe 10 SEK European average (2,094) 822 Average consumer credit per capita at the end of 2012 in Europe was EUR 2,094. Sweden s per capita rate is approximately the same as the European average. Finland exceeds the average and has consumer credit per capita of EUR 2,520. Consumer credit per capita is only EUR 822 in Poland. In the UK (the country with the highest consumer credit per capita), the rate exceeds that in Finland, Sweden and Poland by 58%, 90% and 385%, respectively. 9 Source: PwC Personal loans market in Poland Source: Credit Agricole - Consumer credit market in Europe at end EUROLOAN GROUP PLC ANNUAL REVIEW

20 30% Consumer credit relative to household consumption in 2012 in Europe 11 25% 20% 15% 10% 14% 13% 10% European average (14.4%) 5% 0% European average consumer credit relative to household consumption was 14% in Poland, Finland and Sweden have lower rates of consumer credit relative to household consumption, indicating the potential in these markets. Barriers to enter new markets Several potential markets have regulatory barriers, including licensing requirements, APR caps on loans etc. Other barriers include limited availability of online information for identification and scoring, undeveloped banking systems for payments, and low internet penetration. Generally bad or unreliable payment behavior among consumers is also a barrier of market entry, if the non-performing customers cannot be sufficiently screened through the scoring and credit assessment process. Euroloan developed its current business model, in operation from May 2013, with the specific aim of producing a model and systems that can be applied to all markets, based on revolving credit limits i.e. the same as for credit cards, which are in use in every market. Euroloan targets markets with comparatively high commercial internet use, good availability of online information resources and sufficient consumer payment behavior. Competitive environment Main competitors All local and regional banks, as well as international, consumer finance oriented competitors, offer financing to the same customer group at competitive interest rates. These competitors tend to focus on higher amounts and instalment loans, rather than revolving credit limits and a high volume of transactions as Euroloan does. Payment service providers also offer credit as part of their pay-per-invoice solution and thus compete with Euroloan s services. They charge fees both from the vendors and from the consumers. Payday lenders and peer-to-peer funding generally charge radically higher rates and generally smaller amounts in single loans or similar arrangements. In addition to other dedicated consumer loan providers, the main competitors for revolving credit lines up to EUR 7,000 are credit card providers, retail banks (offering credit cards and overdraft facilities) and vendor financing companies. There are many sources of financing for consumers, and it is not feasible to define direct competitors since a customer may have several sources of financing in use at once and use them 11 Source: Credit Agricole - Consumer credit market in Europe at end 2012 EUROLOAN GROUP PLC ANNUAL REVIEW

21 in other ways than intended, such as using mortgage loans to buy products, etc. In a similar APR price range, there are major credit cards that offer similar credit limits. Euroloan offers a very advanced service, which is different from most other providers. However, the brand awareness of Euroloan is relatively low. In Finland, brand awareness among the entire population is over 13% 12, with higher estimated brand recognition among the customer target groups and especially among investors. In Sweden and Poland, brand awareness is still relatively low, below 5% in Sweden and below 2% in Poland, as the markets are in the process of development. Euroloan has not engaged in large-scale brand marketing, but instead focused on direct targeting of intended customer groups. As described above, the market for consumer finance includes several service providers offering unsecured lending via different methods. In terms of the total unsecured lending market in Finland, the Group expected its market share to be about 0.2% for 2014 based on market size estimates from ECB. The Group believes to be one of the largest revolving credit limit providers in Finland (excluding credit cards). The largest business area (Consumer Finance) has, in the view of the Group, three main groups of competitors: Group A consists of credit cards issued by major banks. These have an APR (Finland) typically ranging from 15% to 35% and customers are usually well anchored to their main bank and current credit line. Euroloan s solution is perceived either as an instant option or as a complimentary credit service to these customers. Group B consists of consumer finance companies/banks focused on consumer finance. Typically the product is a single unsecured loan of several thousand euros (not a revolving credit line) and the price range is from 12% to the APR cap (Finland) of about 50%. Group C consists of payday lenders, which typically provide single loans of a few hundred euros relatively quickly. These are typically expensive in terms of APR, in the range of up to rates ex- ceeding 1000%. The products are often under the legal APR caps, but require something extra, such as for the customer to provide collateral or a guarantee in order to be eligible for a loan. Differentiating factors and competitive advantage Customers are often unwilling to share information regarding their consumption pattern, spending habits or temporary needs for additional funding, etc. with their main bank (salary account, mortgage provider etc.) as these factors may have an effect on their bank relationship and e.g. credit decisions. Additionally, the process of obtaining funding from a bank is generally timeconsuming, carries additional fees, and is not available when needed. Services are generally inflexible ( one size fits all ). Banks categorise their customer into large groups, mostly with identical pricing, which means that customers with an excellent credit rating may be offered high rates, and customers with a lower credit rating are usually denied financing. Product financing (paying in instalments) linked to capital goods (electronics, furniture, cars, etc.) is on the whole cumbersome, and relatively expensive, and often requires the customer to pay a premium price for the product to obtain the financing, while being bound to the particular vendor. Euroloan s offers real-time, flexible financing, with a free limit (pay only if used), does not tie up the customer to any particular vendors, and offers competitive rates for a wider group of customers than most competitors. One key differentiating factor is the individual offer that each customer receives based on the automatic scoring process. Each customer gets an individual price (APR), monthly repayment plan, and credit limit, calculated specifically for that individual. A highly automated and tailored approach is uncommon in the industry. Riskbased fixed-margin pricing is key to being able to serve every customer regardless of their credit score. Completely non-performing customers are naturally not accepted, as the pricing would be unreasonable for the comparatively low number of very high-risk customers. Local rules, such as the APR caps also affect the choice of target customer groups. For example in Finland Euroloan offers an individually priced APR range from 4,9% to 50,0%. 12 Source: Euroloan Brand Research by Media Agency Virta Mediacommunity in September EUROLOAN GROUP PLC ANNUAL REVIEW

22 Another key differentiating factor is that the fully automated credit process is cloud-based and scalable. This means that the service can be scaled to a larger number of customers without loss of performance, and requiring a limited additional workforce (limited increase in the outsourced call center/customer service capability). The fully automated process also increases versatility, as Euroloan has shown in introducing online payment services and a free-of-charge (for the vendor) payment option for online shops and service providers. Due to its low cost structure and the high level of automation, Euroloan can offer a competitive pricing model and the differences in pricing increase the higher the volumes of credit. Development of profit and costs volume growth. The consolidated net profit after tax for 2014 was EUR 6 794, compared to the EUR for the previous year. During the second quarter of 2014 costs related to a successful, oversubscribed equity issue generated one-off financing costs of EUR 0,4 million. Profit was negatively affected by a failed EUR 15 million bond issue in June, which is why sufficient capital has not been available to fuel the rapid growth rate of the Group. Funding availability has improved radically from February Personnel costs decreased from EUR 1,7 million in 2013 to EUR 1,4 million in Other costs decreased from EUR 5,3 million in 2013 to EUR 5,2 million in Total costs decreased 5% from EUR 7,1 million in 2013 to EUR 6,7 million in Operating profit increased by 39% from EUR 1,8 million to EUR 2,5 million mainly due to business Financial indicators Turnover m ,9 Other operating income, m ,0 Earnings before interest and tax, m Return on equity (ROE) % 60 % 16 % 3 % 0% Equity ratio 14 % 11 % 32 % 39% Calculation of key indicators Turnover Other operating income Earnings before interest and tax Calculated directly from the income statement Calculated directly from the income statement Calculated directly from the income statement Return on equity (ROE), % = Profit for the financial year Equity + minority interest Equity ratio, % = Equity Total balance sheet EUROLOAN GROUP PLC ANNUAL REVIEW

23 Parent company s trend in earnings The turnover of the Group s parent company Euroloan Group PLC for the financial year was EUR 4,9 million (EUR 1,3 million). Most of the turnover originates from selling services to other Group companies. The parent company s profit was EUR 0,3 million (EUR 0,0 million). Balance sheet and financing The Group s equity ratio increased to 39 % from 32 % the previous year, increasing by 22%. The Group s equity at the end of the period was EUR 17,7 million (EUR 10,3 million). The total balance sheet grew by EUR 13,0 million during the year, or 41%, to EUR 45,2 (32,1) million. The growth came mainly through consumer finance, increase in both equity and foreign capital raised through bond emissions. Personnel and organization The number of employees at the end of 2014 was 39 (40). Compared to the previous year, the personnel decreased by one person, or 3%. Of the personnel, 39 (40), 100 % (100 %) were full-time employees. Of the employees, 82% worked in Finland and 18% in other countries. One of the main tasks in 2014 for human resources management was to prepare for rapid international growth. To this end, human resources management established several working groups. In managerial appointments, special attention was paid to international and leadership skills as well as general competence development. Human resources management also participated closely in developing operations in the Group s current and new markets. During the year, several training events were organized, with the focus on development of competence, in order to ensure a good operating base for the company s key personnel. The aim is to share best practices and support project planning and management. Business areas Euroloan s services are based on proprietary cloud-based financial technology systems. Through state-of-the-art technology, the Group can provide instant credit decisions, payment and collection services, combined with scalability on an international level. Euroloan currently provides services to its customers within the areas of consumer finance, collection services and systems. The Group operations include the following business areas and group services: CONSUMER FINANCE Consumer Finance was the Group s largest business area in 2014, significantly affecting the risks and financial performance of the entire Group. The main product within the consumer finance business segment is a virtual credit card, operating with a revolving credit limit mechanism. A revolving credit limit is a line of credit open to the limit agreed between Euroloan and a customer, which can be used repeatedly even after a partial repayment of the credit drawn, and which is always available when needed. The customer only pays interest on the amount which has been drawn. The Group offers credit limits of up to EUR 7,000, with immediate credit availability through the fully automated, web-based service which is also accessible via mobile devices. The service is offered to different customer segments, the aim being to collect as much information as possible about each of them. This information includes payment behaviour and bad payment history, price/demand elasticity and price/payment rate effects. Such information is an important part of credit risk management and helps to reduce credit losses, and benefit customers through lower costs. Euroloan has developed an efficient and scalable solution for online payment processing, online lending and back-office functions such as automated credit scoring, debtor analysis and payment monitoring. Euroloan s customers within the consumer sector have real-time access to their credit account and web payment services through the web interface of Euroloan s fast and lean front-end systems and services, which offer instant payment of the credit withdrawal to the customer s or third-party s bank account. The cloud-based systems are fully scalable and designed to handle very high transaction volumes instantly, including automated identification, scoring, customer assessment, credit limit setting, individual pricing and instant payment processes. Incoming payment processing, interest calculation and service charges are all also fully automated. The system is designed to allow for frequent process optimization and the core processes can be quickly and securely modified in a visual design process to optimize performance and improve profitability, while retaining strict quality control and security at all times. 24 EUROLOAN GROUP PLC ANNUAL REVIEW

24 The revolving credit line is offered to customers by the Group s subsidiary, Euroloan Consumer Finance PLC, and its subsidiaries in the Finnish, Swedish and Polish markets. CORPORATE CUSTOMERS & COLLECTION The corporate customers business area includes payment and trade finance solutions for business partners (merchants and webshops), and comprehensive collection services and collection systems for customers with high transaction volumes. These services are currently only offered in Finland. Euroloan has developed an e-commerce payment platform for our partners, who now number over 40 and include leading online shops. The customers of our partners can now pay for their goods and services using Euroloan s credit in webshops and storefronts all over the country. The collection business is conducted via the subsidiary, Crédito Cobro Oy, with the trademark Cobro24. Cobro24 provides notification and collection services for consumer and business customers. The subsidiary Digna IT Oy has developed a next generation of cloud-based collection systems, called Digna, which is used for automated collection by high transaction volume businesses, including Euroloan Consumer Finance PLC. Within collection systems, Euroloan helps to integrate its collection system, Digna, into all major customer care and billing systems and/or standardized invoice formats to offer efficiency in high-volume collection transactions combined with a flexible collection flow that can be easily changed by the customer In the Cobro24 collection service, the debtor s payments are remitted to the creditor s account without any deductions. The traditional method is for the debtor to pay the collection agency, which settles the payments and directs the payment to the creditor. This causes delays from several days up to weeks in the final settlement to the creditor. Due to modern and automated systems, the operation is very efficient and ties up less capital than traditional debt collection services as cash flows are paid directly to the creditor. The efficiency of the business model is based on intelligent information systems, methodical operational processes, and a new kind of approach to the business, one that changes traditional practices in the debt collection industry. Cobro24 s solutions are flexible and can be scaled in accordance with the volume of customers business operations. Collection and systems customers include, for instance, the following organizations among over 50 clients customers of significant size, including banks, cities, insurance companies and municipalities: Falck Oy, Finnvera, Hankkija Oy, The Cities of Helsinki, Joensuu, Rauma, Rovaniemi, Savonlinna, Vaasa, Intrum Justitia Oy, Nordea Rahoitus Suomi Oy, Osuuspankki Poppia, Pohjanmaan Osuuspankki, S-Pankki Oy, Suomen Vahinkovakuutus Oy, Suupohjan Osuuspankki, Takuu-Säätiö, Tieto- Tapiola Oy. The Group also offers corporate customers secured loans of between EUR 50,000 and EUR 500,000 with maturities from 6 to 24 months, provided that their accounts receivable are sufficient to use as collateral. Euroloan s Business Finance solutions offer an alternative solution for businesses to grow faster and free-up working capital tied in the daily business. Business credit decisions are based on Euroloan s expert credit risk management and ratings provided by professional rating companies. SAVINGS & DEPOSITS The Group has developed the savings and deposits business to a high level of readiness in preparation for conducting a licensed business, including management, systems, capitalization, and supporting functions such as compliance, risk management, internal audit and risk control. The Group s experience in efficient management of high-volume transactions will benefit depositors through competitive deposit interest rates and user-friendly services. In addition to the opportunity to offer savings and deposit solutions to customers, the Group can effectively decrease its funding costs and easily refinance large redemptions. The business area is preparing to apply for a license during The license would allow Euroloan to accept deposits with a state guarantee up to EUR , and enable a wider offering of financial services to the public. GROUP SERVICES The Group s parent company provides strategic, administrative, financial administration and personnel services as well as funding mainly to Group companies. EUROLOAN GROUP PLC ANNUAL REVIEW

25 Board and auditors The Shareholders Meeting held on March 7 th, 2014 re-elected Tommi Lindfors, Timo Saini, Riitta Salonen, Heikki Palosuo and Jonas Lindholm as members of the Board of the Group s parent company. The Chairman of the Board is Tommi Lindfors. The Shareholders Meeting appointed PricewaterhouseCoopers Oy as the Authorized Public Accountant, with Martin Grandell having the principal responsibility. Responsibility Euroloan Group PLC is a reliable and responsible partner. Our operations adhere to the Finnish, Swedish, Polish and Danish legislation and regulations by the local regional administration, consumer and financial supervisory authorities. The Group requires compliance with the company s ethical guidelines from personnel and contractors. Summary of Euroloan s ethical guidelines: We follow existing laws and regulations, and actively help to enforce them. We strive to implement the recommendations of authorities. We welcome improved oversight of the finance sector. Our reports are accurate and truthful. We are fair in our dealings and follow our policies, treating all our customers in the same manner. We do not associate ourselves with corruption or underhanded dealings. We honor our agreements and expect others to do the same. We do not take unreasonable risks, but conduct business in a prudent and reliable manner. We treat our personnel fairly and equally. We lead by example. Our values are something we live by they should shine through what we do. In our everyday work, we bring our personal values, which include the responsibility for people and the environment. We want to provide a safe, friendly and familiar environment for our staff. In all interaction with our customers and investors, openness, fairness and good service are our leading values. Euroloan Group PLC is a Finnish public limited company. The responsibilities and obligations of its governing bodies are provided by Finnish law. The company s Board of Directors has determined the company s principles of corporate governance. The Group follows consumer protection laws and regulations, and the recommendations issued by consumer protection authorities. Corporate governance and decision-making comply with the Finnish Limited Liability Companies Act (public limited companies), other similar legislation, and the company s Articles of Association. We follow the principles of openness, fairness and good service, and we are committed to this aim in all our activities. Our financers and investors are actively involved in business development, and we strive to provide all necessary information for them to make sound investment decisions. The company follows the more stringent reporting requirements of a public limited company. Since 2009, we have agreed to reduce emissions and plant trees in deforested areas of the world. In environmental issues, we partner with Carbonfund.org Foundation. Reduction in carbon dioxide emissions reduces the amount of fossil fuel sources, like coal and oil, used to produce energy. Deforestation accounts for 20% of climate change, so reforestation is essential in solving the problem. Reforestation binds carbon dioxide and prevents climate change improves air quality (by binding air impurities and producing oxygen) preserves biodiversity decreases floods and erosion provides habitat and sustenance for fauna creates jobs in nursery gardens, planting and forest management. Changes in shareholding, ownership and Group structure At the end of the financial year, Euroloan Group PLC had three share series: A-, B- and C-shares. The number of shares were: A-shares , B-shares 153 and C-shares 73. During the financial year new A-shares, 153 B-shares and 73 C-shares were subscribed in share issues. Of 26 EUROLOAN GROUP PLC ANNUAL REVIEW

26 those A-shares will be registered during the first quarter of notes to the financial statements for more detailed information. Crédito Cobro Ltd has a subordinated loan from Euroloan Consumer Finance PLC. Please refer to Major shareholders per Shareholders Shares (pcs) Share of ownership (%) Bonares Oy (in which Tommi Lindfors exercises controlling power) ,30 % Eficaz Capital Oy ,93 % NGH Invest Oy ,62 % Zandora Oy ,11 % Keskinarkaus Arto ,61 % Optiopaja Oy ,42 % RoMa M.I.E. Oy ,76 % Mergus Oy (in which Timo Saini exercises controlling power) ,59 % Oxford IPC Ltd Oy (in which Jonas Lindholm exercises controlling power) ,39 % Scorchio Invest Oy (in which Samuli Korpinen exercises controlling power) ,37 % Other shareholders, total ,90 % Shares, total ,00 % The number of shareholders was 188 on 31 December Group structure Euroloan Group includes a total of nine companies including the parent company. Euroloan Group PLC owns the entire share capital of all eight subsidiaries either directly or indirectly as described in the picture below. Euroloan Group PLC 100 % Crédito Cobro Oy 100 % Euroloan Consumer Finance PLC Euroloan Finance AB 100 % 100 % ELCF Sweden AB 100 % 100 % Digna IT Oy Crédito Cobro Capital Oy Euroloan Consumer Finance Sp. 100 % 100 % Euroloan Consumer Finance APS EUROLOAN GROUP PLC ANNUAL REVIEW

27 Euroloan is headquartered in Helsinki, Finland and has offices in Stockholm, Sweden and Warsaw, Poland. There are no operations currently in Denmark. The picture below describes the companies by country. Share capital development and authorizations of the Board of Directors The share capital remained at the same level as in 2013, at EUR In an Extraordinary Shareholders Meeting, the Board was authorized to decide on issuing shares in one or several batches, up to a maximum of shares on top of the previous decision made in 2013 for shares. The new authorization is valid for a period of five years. On the basis of the authorization, the Board of Directors issued conditional share options, with a typical maturity of five years, to the personnel and launched a share issue of shares, which were immediately oversubscribed in Q2/2014 at 6,00 euros/share. A total amount of shares have been directed towards employee and partner option contracts per Risk management The Board of Directors of Euroloan Group PLC has formed from its membership a Risk Committee responsible for the Group s risk management. The task of the Risk Committee is to recognize, analyze and control the Group s risks. The committee approves the risk management principles, risk limits and guidelines according to which risk management is organized. The Risk Committee presents the Board with the proposals concerning risk taking. The Group s most significant strategic and business risks include operative, financial, liquidity, credit, market, currency and interest risks. A separate, more elaborate risk description can be found on the Group s website and in the Annual Review of Business environment Opposite to the previous years, both the legislation and operating environment in the Group s largest market, Finland, were relatively stable during This enabled resources to work on immediate growth and building readiness for future growth as the main focus areas. The Swedish environment required lending companies to register under the Swedish Financial Services Authority (SFSA) and the Groups Swedish subsidiary conducting consumer finance filed the registration during December. In Poland the operating environment was relatively stable during the calendar year. In terms of lending volume, October of 2014 was the best month in the Group s history. Demand in the following months was even higher, but all available capital had been employed which restricted volumes during the last two months of the year. Dividend proposal by the Board of Directors As the Board of Directors believe that obtaining a license for accepting deposits from the public is a cornerstone to adding shareholder value, the Board of Directors proposes that there will be no dividend paid for the financial year of The proposal is based on the need for Common Equity Tier I capital complying with the Basel III and CRD4 regulations, brought about by the Financial Institution license process. As equity requires further strengthening during 2015, any dividend distribution would have a negative impact on the capital base and hinder the growth rate considerably. 28 EUROLOAN GROUP PLC ANNUAL REVIEW

28 Relevant events after the end of the financial year Euroloan Group PLC signed a EUR 15 million convertible loan funding facility on February 17 th The funding facility was part of the larger EUR 100 million total requirement expected to be raised within the next 2-3 years. Raising capital to meet Euroloan's rapid growth targets and to strengthen the Group's capital structure ahead of Basel III and CRD IV capital requirements is a requirement to enable rapid growth. The total planned structure includes a combination of Common Equity Tier I, Additional Tier I, Tier II and senior debt. A strong capital base gives the Group flexibility to grow while maintaining high capital ratios on its balance sheet. Euroloan Group PLC has earned a position on the 2015 Inc Europe, Inc.'s ranking of the fastest-growing privately held companies in the European continent. The median company on the list increased sales by more than 275 percent since the start of 2010, while the average honoree grew by 416 percent. Outlook for 2015 The Board of Directors estimates the operating environment to remain relatively stable in Finland and Sweden and some changes to happen in the Polish market during The outlook regarding turnover, income and total balance sheet for the financial year is that they will grow from the previous year, but notes that the availability of liquidity in particular will affect the outcome significantly. Helsinki, 4. March 2015 Board of Directors of Euroloan Group PLC EUROLOAN GROUP PLC ANNUAL REVIEW

29 CONSOLIDATED FINANCIAL STATEMENTS Income statement TURNOVER , ,14 Other operating income 4 510, ,09 Materials and supplies External services , ,61 Total , ,61 Personnel costs Salaries and benefits , ,82 Social security costs Pension costs , ,50 Other social security costs , ,78 Total , ,10 Depreciation and impairment Planned depreciation , ,96 Depreciation of goodwill on consolidation and decrease in Group reserve , ,05 Depreciation of fixed assets 0, ,64 Total , ,65 Other operating costs , ,74 OPERATING PROFIT (LOSS) , ,13 Financial income and expenses Other interest and financial income From others , ,26 Total , ,26 Interest and other financial expenses To others , ,04 Total , ,04 Total , ,78 PROFIT BEFORE APPROPRIATIONS AND TAXES , ,35 Income taxes , ,05 PROFIT (LOSS) FOR THE FINANCIAL YEAR 6 793, ,30 30 EUROLOAN GROUP PLC ANNUAL REVIEW

30 Balance sheet ASSETS NON-CURRENT ASSETS Intangible assets Development expenditure , ,20 Intangible rights , ,50 Consolidated goodwill , ,99 Total , ,69 Tangible assets Machinery and equipment , ,80 Other tangible assets 2 500, ,00 Total , ,80 Investments Holdings in Group companies , ,35 Total , ,35 NON-CURRENT ASSETS, TOTAL , ,84 CURRENT ASSETS Other current assets 4 421,80 0,00 Total 4 421,80 0,00 Receivables Short-term Sales receivables , ,15 Loan receivables , ,52 Other receivables , ,25 Unpaid shares ,00 0,00 Accrued income , ,65 Total , ,57 Cash in hand and at bank , ,60 CURRENT ASSETS, TOTAL , ,17 ASSETS, TOTAL , , EQUITY AND LIABILITIES EQUITY Share capital , ,00 Share issue ,00 Translation difference , ,30 Invested unrestricted equity reserve , ,66 Retained profit (loss) , ,65 Profit (loss) for the financial year 6 793, ,30 EQUITY, TOTAL , ,91 GROUP RESERVE , ,63 EUROLOAN GROUP PLC ANNUAL REVIEW

31 LIABILITIES Long-term Bonds , ,00 Loans from financial institutions , ,00 Total , ,00 Short-term Bonds , ,00 Accounts payable , ,93 Other liabilities , ,12 Prepayments and accrued income , ,42 Total , ,47 LIABILITIES, TOTAL , ,47 EQUITY AND LIABILITIES, TOTAL , ,01 Cash flow statement OPERATING CASH FLOW: Cash receipts from sales , ,92 Cash receipts from other business income 4 510, ,09 Cash receipts from operating expenses , ,52 Operating cash flow before financial items and taxes , ,51 Interest and fees paid for other operating financial costs , ,82 Interest received from business operations , ,26 Direct taxes paid , ,55 Operating cash flow , ,62 INVESTMENT CASH FLOW: Investments in tangible and intangible assets , ,32 Other investments ,01 0,00 Acquisitions of subsidiaries 0, ,67 Investment cash flow , ,99 FINANCIAL CASH FLOW: Share issue ,00 0,00 Stock repurchase ,98 0,00 Withdrawal of short-term loans , ,00 Repayment of short-term loans , ,00 Withdrawal of long-term loans , ,00 Repayment of long-term loans ,00 0,00 Dividends paid and other distribution of profit , ,62 Financial cash flow , ,38 Change in cash , ,77 Cash at beginning of financial year , ,83 Cash at end of financial year , ,60 32 EUROLOAN GROUP PLC ANNUAL REVIEW

32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Consolidated financial statements The same valuation and periodization principles have been followed in the consolidated financial statements as in the parent company s financial statements. Subsidiaries Crédito Cobro Ltd and Euroloan Consumer Finance PLC and their wholly-owned subsidiaries Crédito Cobro Capital Oy, Digna IT Oy, ELCF Sweden AB, Euroloan Consumer Finance S.P. z.o.o. and Euroloan Finance AB are consolidated in the Euroloan Group PLC s consolidated financial statements. Euroloan Consumer Finance PLC s subsidiary Euroloan Consumer Finance APS has not been consolidated, since it has not had any business activities yet. The consolidation has been made in accordance with the valid Accounting Act. The consolidated financial statements have been prepared by using the acquisition cost method. The difference between the subsidiaries acquisition cost and the equity corresponding to the acquired share is presented as consolidated goodwill. Intra-group transactions, mutual receivables, and receivables and liabilities as well as internal profit distribution have been eliminated. PREPARATION OF THE FINANCIAL STATEMENTS Valuation principles and methods The company s non-current assets are valued at their variable acquisition cost. Periodization principles and methods The acquisition cost of the fixed assets subject to wear and tear owned by the company is written off according to a prepared plan. Asset type Machinery and equipment Development expenditure Copyright Consolidated goodwill Depreciation method/ percentage outlay residue write-off 25% 15-year straight-line 15-year straight-line 20-year straight-line The depreciation period for goodwill is 20 years. The long period is justified because of the particularly long-term added value expected from the acquired companies, for example due to the receivable cash flows for years to come. The customer base of the companies is also expected to generate long-term income. The consolidated financial statements are available at Euroloan Group PLC s office at Energiakuja 3, Helsinki, Finland. EUROLOAN GROUP PLC ANNUAL REVIEW

33 INCOME STATEMENT Financial income and expenses Other interest and financial income From others , ,26 Total , ,26 Interest and other financial expenses Interest expenses on shareholder loans , ,58 To others , ,46 Total , ,04 Total , ,78 ASSETS Development expenditure Book value at the beginning of the financial year , ,78 Additions , ,32 Transfer from advance payments 0, ,09 Write-down 0, ,64 Planned depreciation , ,35 Book value at the end of the financial year , ,20 Copyright Book value at the beginning of the financial year , ,50 Planned depreciation , ,00 Book value at the end of the financial year , ,50 Consolidated goodwill , ,99 Advance payments Book value at the beginning of the financial year 0, ,09 Transfer to development expenditure 0, ,09 Book value at the end of the financial year 0,00 0,00 Machinery and equipment Book value at the beginning of the financial year , ,41 Planned depreciation , ,61 Book value at the end of the financial year , ,80 Other tangible assets Book value at the beginning of the financial year 2 500, ,00 Book value at the end of the financial year 2 500, ,00 LIABILITIES Specification of equity Restricted equity Share capital At the beginning of the financial year , ,00 Additions 0, ,00 34 EUROLOAN GROUP PLC ANNUAL REVIEW

34 At the end of the financial year , ,00 Share issue At the beginning of the financial year 0,00 0,00 Additions ,00 0,00 Registered ,00 0,00 At the end of the financial year ,00 0,00 Translation difference At the beginning of the financial year , ,53 Additions , ,83 At the end of the financial year , ,30 Restricted equity, total , ,30 Unrestricted equity Invested unrestricted equity reserve At the beginning of the financial year , ,01 Additions , ,65 At the end of the financial year , , , ,65 Retained profit (loss) Profit (loss) for the financial year 6 793, ,30 Dividends paid , ,00 Accrued profits , ,95 Unrestricted equity, total , ,61 Distributable funds , ,61 COLLATERAL AND CONTINGENT LIABILITIES Liabilities and collateral, by balance sheet item and type of collateral Specification of liabilities Amount Collateral Bonds ,00 Liabilities to financial institutions ,00 Liabilities to shareholders ,00 Other liabilities ,66 Some with collateral EUROLOAN GROUP PLC ANNUAL REVIEW

35 ACCOUNTING PRINCIPLES OF FINANCIAL STATEMENTS The consolidated financial statements have been prepared in compliance with the Finnish Accounting Standards (FAS). The consolidated financial statements are based on actual costs, with the exception of financial assets, liabilities and derivative contracts booked at fair value. PRINCIPLES OF CONSOLIDATION Subsidiaries The consolidated financial statements include the parent company Euroloan Group PLC and all its subsidiaries except for the Danish subsidiary. Subsidiaries are companies controlled by the Group. All subsidiaries are wholly-owned. Control exists when the Group holds over half of the voting rights or otherwise has control over the company s financial management and operating policy decisions. Intra-group holdings are eliminated using the acquisition cost method. The acquired subsidiaries are included in the consolidated financial statements from the date that the Group obtained control. Intra-group transactions, receivables, liabilities, unrealized gains and profit distribution are eliminated in preparing the consolidated financial statements. Unrealized losses are not eliminated if they are due to impairment. The profit distribution for the financial year between owners of the parent company and minority shareholders is included in the income statement, and the minority share of equity is presented in the balance sheet as a separate item. The consolidated subsidiaries included in the consolidated financial statements are ELCF Sweden AB, Euroloan Finance AB, Euroloan Consumer Finance Sp. z.o.o, Euroloan Consumer Finance PLC, Crédito Cobro Ltd, Crédito Cobro Capital Oy and Digna IT Oy. TRANSLATION OF FOREIGN CURRENCY ITEMS The profit and financial position of the Group entities are measured using the currency of the primary economic environment in which each entity operates ( functional currency ). The consolidated financial statements are presented in euro, which is the functional and reporting currency of the parent company. The income statements of foreign Group companies are translated into euro using the average exchange rate for the period, and balance sheets are translated at the exchange rate on the balance sheet date. Translation differences arising from different rates in the income statement and balance sheet are reported in equity. Translation differences arising from eliminating the acquisition cost of foreign subsidiaries and the translation of the foreign subsidiaries accumulated equity subsequent to acquisition are reported in equity. When a subsidiary is divested entirely or partially, the cumulative exchange differences are included in the income statement under sales gains or losses. TANGIBLE ASSETS Property, plant and equipment are valued at actual cost minus accumulated depreciation and impairment losses. Other subsequent expenses are included in the carrying value of the property, plant and equipment only if it is probable that the future economic benefits that are attributable to the asset will benefit the Group and the cost of the asset can be measured reliably. Other repair and maintenance costs are expensed as incurred. Assets are depreciated as follows: Machinery and equipment: outlay residue write-off Art objects: no write-off The residual value of these assets and their useful lives are reassessed when the financial statements are prepared and, if necessary, adjusted accordingly to reflect any changes in the future economic benefits expected. Gains or losses on disposal or sale of property, plant and equipment are included under other business income or expenses. 36 EUROLOAN GROUP PLC ANNUAL REVIEW

36 INTANGIBLE ASSETS The Group s main intangible assets are intellectual property rights related to information systems and goodwill. Intangible assets are recognized in the balance sheet only if it is probable that the expected future economic benefits that are attributable to the assets will flow to the Group and the cost of the assets can be measured reliably. Intangible assets with finite useful lives are recorded in the balance sheet at historical cost, and amortization is recognized in the income statement on a straight-line basis over their known or estimated useful lives. Intangible assets include personnel costs from information system development projects and consultancy fees of external service providers. The depreciation period for intellectual property rights is fifteen years. Goodwill Goodwill represents the amount of the cost that exceeds the Group s share of the net fair value of the acquired company on the date of acquisition. Goodwill is measured at historical cost less straight-line depreciation. The depreciation period is 20 years. The long period is justified because of the particularly long-term added value expected from the acquired companies, for example due to the receivable cash flows for years to come. The customer base of the companies is also expected to generate long-term income. FINANCING COSTS Financing costs are recorded as expenses in the period in which they are incurred. Transaction costs directly related to the borrowing of funds and clearly attributable to a specific loan are amortized over the loan period. IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS At each balance sheet date the Group assesses whether there is any indication that an asset may be impaired. If any such indication exists, the asset s recoverable amount is estimated. The recoverable amount of goodwill and intangible assets not yet available for use is also annually estimated, independent of any indication of impairment. The need for impairment is assessed at the level of cash-generating units, which in the case of Euroloan Group PLC is the subsidiary level. The recoverable amount is the higher of an asset s fair value less divestment cost and its value in use. The value in use is calculated by estimating future net cash flows expected to be derived from the asset or cash-generating unit, and by discounting them to their present value using a pre-tax discount rate which reflects the market s view on the time value of money and special risks related to the asset item. An impairment loss is recognized when the book value of the asset item exceeds the recoverable amount. In conjunction with this, the impaired asset s useful life will be reassessed. The impairment loss is reversed if conditions have changed and the recoverable amount has changed after the impairment loss was recognized. Impairment losses recognized for goodwill are not reversed. EMPLOYEE BENEFITS Pension obligations Euroloan Group PLC has defined contribution plans. Contribution plan payments are recognized in the income statement in the financial year they are made. All Euroloan Group PLC pension arrangements are financed through contributions to pension insurance companies. Contributions are made taking into account local country-specific provisions and practices. Remuneration In 2013, Euroloan Group PLC implemented an option-based incentive system for the entire personnel. The objective is to support the implementation of the Group s strategy and to ensure profitable growth through personnel commitment. INCOME TAXES The income tax expense in the income statement consists of current tax based on the taxable profit for the period and deferred tax. Current tax is calculated on the taxable profit using the tax rate in force in each country. The resulting tax is adjusted by any tax relating to previous years. Deferred tax is calculated on all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available, against which a temporary difference can be utilized. Deferred tax is calculated by using the enacted tax rates prior to the balance sheet date. EUROLOAN GROUP PLC ANNUAL REVIEW

37 CURRENT ASSETS Derecognition of current assets occurs when the Group has lost the contractual right to cash flows or when it has substantially transferred the risks and rewards outside the Group. Current assets accounts receivables comprise fees accounted for the year which are not paid at the balance sheet date. Accounts receivables are written down if it is probable that the fee booked as accounts receivables will not be received. Loan receivables include lending receivables, including loan period fees. Of the receivables transferred to collection, only the capitalized amount transferred to collection is recognized. The amount includes the loan capital and the loan period fees and interest but not the falling due fee or reminder costs. Unpaid loan receivables are typically transferred to collection about 45 days after due date. Written-off receivables include loan receivables borrowed under criminal pretenses, and receivables where the debtor has died or entered debt restructuring. Overdue loan receivables, where it is deemed probable that the debtor is unable to repay the debt (based on insolvency and debt amount), are also written off at the end of the year. Current assets include periodized bond transaction fees. Cash and cash equivalents comprise cash in the Group s bank accounts. LIABILITIES Bonds and debt securities are recognized at nominal value. Variable bond revenue shares are recognized at balance sheet date value. DESCRIPTION OF EUROLOAN GROUP PLC S FINANCIAL REPORTING PROCESS The Board of Directors oversees the financial reporting process. The CEO and the CFO are responsible for controlling and ensuring the quality of the Group s financial reporting. The Group prepares an annual financial statement published via press release. The Board receives monthly financial reports for each business area. Accounting compiles financial reports per company partly based on business area financial data from operative systems. The veracity of the financial information from independent companies and the Group is ensured using various daily, weekly and monthly control procedures as well as matching and verification procedures. From the operative systems, information is regularly transferred to the financial administration systems. Financial administration ensures that all material is delivered and transferred to accounting. The accounts of all Finnish Group companies are included in the same accounting system, and the companies follow the same accounting principles. The accounts of the foreign subsidiaries are prepared by local accounting firms providing monthly accounting reports. Accounting is responsible for monitoring the Group s financial development continuously, at both the Group and business unit level. The objective is to identify and highlight both success factors and development targets in time to allow for time to react on them. Accounting provides monthly reports of Group level development and future prospects to the Steering Committee and the Board of Directors. Development is assessed by comparing realized figures to the budget and a regularly updated forecast for the remainder of the year. 38 EUROLOAN GROUP PLC ANNUAL REVIEW

38 CORPORATE GOVERNANCE Euroloan Group PLC is a Finnish public limited company regulated by Finnish law and the company s Articles of Association in its operations and obligations. The company s Board of Directors is responsible for organizing the administration and business activities of the company according to the law and determines the company s principles of corporate governance. We are committed to our values and strive to work in accordance with them every day. The company follows consumer protection laws and regulations, and the recommendations issued by consumer protection authorities. The Group s foreign subsidiaries follow the laws and regulations of their respective countries and business sectors, instructions of the supervisory authority for the respective company and the company s Articles of Association. We follow the principles of openness, fairness and good service, and we are committed to this aim in all our activities. Our financers and investors are actively involved in business development, and we strive to provide all necessary information for them to make sound investment decisions. The company follows the reporting requirements of a public limited company, and is audited by PriceWaterhouseCoopers Oy (APA-community), responsible auditor Martin Grandell. Decision-making The responsibility for administration and operations of Euroloan Group PLC is vested in the following governing bodies: General Meeting of Shareholders Board of Directors CEO Steering Committee GENERAL MEETING OF SHAREHOLDERS Ultimate decision-making is vested in the company s General Meeting of Shareholders. The Shareholders Meeting is held once a year at a time determined by the company s Board of Directors. The meeting must be held by the end of June each year, with an agenda assigned to it by law and the company s Articles of Association. Proposals by shareholders are also decided upon in the meeting. The company s Board of Directors call the General Meeting no earlier than two months and no later than one week in advance. BOARD OF DIRECTORS The Board of Directors (the Board ) is responsible for the company s administration and for the proper organization of the company s operations. The Board supervises the operative management of the company, appoints and dismisses the CEO, and decides on the company s strategy, investments, organization and finances. The Board ensures that the operations of the company are conducted appropriately, and that the company identifies, measures and manages the risks associated with its business. In accordance with good corporate governance, the Board also ensures that the company applies stated corporate values in its operations. The Board shall work in the best interest of the company and its shareholders. A board director does not represent the interests of the parties who have proposed his or her election as director. The Shareholders Meeting elects the members of the Board of Directors. The Board comprises between one and ten members and at least one deputy if there are fewer than three board members. Members of the operative management also attend the Board meetings when necessary. The Board has adopted its own working procedure and evaluates its own performance and actions each year. Board members take an active role in the company s everyday business. The Board s main duties include: Setting long-term targets Approving strategies Approving financial targets Approving the organizational structure Confirming the principles of incentive plans Appointing the CEO EUROLOAN GROUP PLC ANNUAL REVIEW

39 Deciding on the remuneration of the CEO Overseeing the proper arrangements for accounting and financial management Deciding on overall capital expenditure and significant individual investments Approving operating principles for management and supervision Overseeing the financial reporting process, and the quality and consistency of the information to be published Evaluating the competence, independence and work of the auditor Evaluating internal control and risk management processes Evaluating compliance with relevant legislation and regulations The Board also monitors the financial situation and development of the company. Additionally, the Board is responsible for evaluating and developing the competitiveness of the company s incentive plans, preparation of remuneration and appointment matters relating to the CEO, charting successors to the CEO and members of Steering Committee, and deciding on the salaries and other benefits of the members of corporate management. CEO The Board of Directors appoints the company s CEO, who is responsible for managing the company s business in accordance with the Finnish Limited Liability Companies Act, the Articles of Association and the instructions issued by the Board of Directors. The CEO leads the company s Steering Committee. COMPANY S STEERING COMMITTEE Euroloan Group PLC has a Steering Committee, the main task of which is to assist the CEO in corporate operative management and business planning. The Steering Committee s other duties include the preparation, follow-up and monitoring of financial and business decisions, as well as business development. The Steering Committee meets regularly. Members of the Steering Committee are appointed by the Board of Directors at the proposal of the CEO. The company s Steering Committee comprises four to six members, and the areas of responsibility of members of the Steering Committee correspond to their respective positions in the company. AUDIT Under its Articles of Association, the company has one auditor, which is usually an Authorized Public Accountant (APA) audit firm. The Shareholders Meeting elects the auditor for one year at a time. In the statutory audit, the auditor audits the accounting records, financial statements and administration of the company. The responsible auditor also audits the Group. From 2013, Euroloan is audited by PricewaterhouseCoopers Oy, responsible auditor Martin Grandell (APA). The previous auditor was Authorized Public Accountant (APA) audit firm Nexia Tilintarkastus Oy, responsible auditor Juhani Loukusa (APA). Internal operating principles and control systems The objective of the Group s operating principles is to strengthen the commitment to financial and other goals and to minimize internal business risks. The Group has a set of internal instructions and policies, including the following examples: COMPLIANCE Compliance Manual and Guidelines Consumer Protection Policy Ethical Rules and Guidelines Information Security Policy Outsourcing Business Policy Instruction for Measures Against Money Laundering and Financing of Terrorism Instruction for Handling Conflicts of Interests RISK MANAGEMENT Business Continuity and Contingency Planning Risk Policy Liquidity Risk Management Guidelines Credit Risk Management Guidelines Disaster Recovery Plan 40 EUROLOAN GROUP PLC ANNUAL REVIEW

40 INTERNAL AUDIT GUIDELINES Remuneration principles The remuneration of the company s management is made up of a fixed salary, an annual bonus and long-term incentive plans such as pension benefits and share bonuses. The Board of Directors decides on the remuneration of the CEO. The Board is responsible for executive remuneration plans and for approving the salaries and other benefits. The Board of Directors approves the terms and conditions of long-term incentive plans and the principles of profit sharing. Appointments within the Group comply with the grandfather principle, whereby the superior of the person proposing the appointment approves all appointments, as well as the salary and other terms related to such appointments. Euroloan Group PLC has a long-term bonus system for key personnel. EUROLOAN GROUP PLC ANNUAL REVIEW

41 RISK MANAGEMENT General Anyone considering investing in Euroloan Group PLC is recommended to review all the risk factors described below. The description contains estimates of the current state and future development of the Group, which carry risks and uncertainties. Investors should be aware of these when making their investment decisions. Estimates, risk descriptions and listed uncertainties are prepared by the Group s Board and management and are based on the information available to the Board and management at the time of preparation. The Group s management and Board strive to update relevant changes to the Group s risks without delay in order to keep the risk description current. If realized, the risks may have a negative impact on the Group s business operations, financial position and the value of the business operations, decreasing the value of the Group s shares and securities issued. The Group aims to prevent risk where possible and to minimize the impact of any risks realized in its risk management. Euroloan applies state-of-the-art corporate risk management models and methodologies as part of strategic planning, business development and daily operations. The aim of Euroloan s risk management process is to limit the total risk exposure of the company to an acceptable level while optimizing the risk/return ratio. Due to the nature of Euroloan s business, particular emphasis is put on analyzing and managing credit risk, and on managing total risk exposure. Advanced risk metrics are used in analysis to form an accurate company risk profile. Company management and the Board of Directors monitor risk exposure. Risk management structure Proper risk management is a working combination of identification, analysis, management, control and supervision of risk, along with the continuous documentation of activities for audit and quality control purposes. The principles for identification, analysis and management of the main risk areas are linked to the properties of each risk, whereas the control and supervision of each risk is linked to organization, authorization, supervision and responsibilities. Figure 1: Group risk management framework 42 EUROLOAN GROUP PLC ANNUAL REVIEW

42 Risk Management is an integral part of the strategic and operational management framework of Euroloan Group. The risk management is structured based on a separation of responsibilities and duties as described in the Three lines of defense table below. Euroloan Group Three lines of Defence in Risk Management 1st LINE OF DEFENCE 2nd LINE OF DEFENCE 3rd LINE OF DEFENCE Risk Ownership Risk Control Risk Assurance Owners Owners Owners CEO Risk Control Internal Audit Business Management Compliance External Audit Risk Management Team Risk Committee Board of Directors Responsibilities Responsibilities Responsibilities Day to day decisions regarding risk management of business risks* Ultimate ownership, responsibility and accountability for identified risks Mitigate risk for the whole organization and business units Monitoring of risks within decided limits Control breakdown or noncompliant activities are reported upwards (* risk limits are set by the Risk Committee or Board of Directors) Oversight and challenge to the internal control framework used in 1st line Continuous monitoring of the consequences of business decisions in relation to predetermined risk appetite Monitoring of adherence to limits Advice to the Board (Risk Committee), Managing Director, Business Management Challenge 1st line risk reporting Produce risk reports to 1st line Independent periodic checking that the internal controls are effective and appropriate Ensure that risk have been identified, monitored and mitigated in 1st and 2nd line Check that laws and regulations are followed Ensure that policies have been effectively implemented Table 1: Three lines of defense main principles of risk management EUROLOAN GROUP PLC ANNUAL REVIEW

43 The following risk management decision-making structure illustrates the Group s risk management organization: Figure 2: Risk management organization BOARD OF DIRECTORS The Board of Directors of the company is responsible toward the company s owners (the annual shareholders meeting) and regulatory authorities for the entire business of the company. Risk management falls under the responsibility of the Board. The Board has the principal responsibility to ensure that regulations, good corporate governance and sound business practices are followed in all the Group s business operations. The Board also sets guidelines and limits for risk management. CEO The CEO is responsible for daily operations being carried out in accordance with the instructions and directives issued by the Board of Directors. The Board appoints and discharges the CEO and oversees the CEO s actions. The CEO may only take actions which are unusual or sizable considering the size and nature of the company s business with the permission of the Board. The CEO is responsible for making sure that the accounting methods employed by the company are legal and that financial matters are managed in a reliable way. In the company s risk management, the operational management led by the CEO is responsible for the daily operations and activities in the company, without the right to make decisions about risk levels. The operational management has the right to view but not decide upon internal controls and documentation, and is responsible for implementing daily risk management. RISK MANAGEMENT Risk management is operated by the Risk Management Team, led by the company s Risk Manager. Decisions regarding risk management and changes to it are prepared by the Risk Management Team that puts them forward to the Risk Committee appointed by the Board. The Risk Management Team regularly monitors and assesses whether the company s risk guidelines and instructions are suitable and effective, and assesses what measures need to be taken to address potential deficiencies. Any decisions are made by the Risk Committee or the company s Board of Directors. RISK CONTROL The Risk Control function shall analyze and report without delay to the Risk Committee, the Risk Management Team and the company s operative management and internal audit any significant deviations from set guidelines or limits which may lead to significant changes in the company s internal risk level. Reporting is done according to an agreed process and is documented in a way that facilitates the control and audit of analysis results. INTERNAL AUDIT An internal auditor, who is independent from operational functions in the company, regularly assesses internal processes, decisions and controls, and reports any findings along with improvement 44 EUROLOAN GROUP PLC ANNUAL REVIEW

44 suggestions directly to the company s Board of Directors. Internal audit services may also be provided by a third-party provider (audit company), which is independent of the company s external auditors. AUDIT The company s external auditors audit the entire business with complete insight into reporting, decisions made and documentation. The auditors are responsible to the company s shareholders and regulatory authorities. The external audit is carried out on a continuous basis (i.e. process audit) and for the company s annual review. Risks associated with the company GENERAL The company is the parent company of a wholly owned Group with the same name. For more information about the Group s and the companies operations, please refer the company s website or this document. The company s trade secrets are not available, neither are any e.g. third-party ratings or recommendations concerning the company s share or creditworthiness. The Group s risk exposure mainly consists of the following risks: Strategic risk and business risks Operational risk Financial risk o o Market risk o o Liquidity risk Credit risk Exchange rate risk Interest rate risk Figure 3: Group risk structure EUROLOAN GROUP PLC ANNUAL REVIEW

45 Below are described identified risks and the principles for their management within Euroloan Group. STRATEGIC RISK AND BUSINESS RISK Strategic risk and business risks comprise the cost risk associated with a company choosing the wrong business strategy or failing to adapt the business to a new operating environment, such as changes in the regulatory environment affecting the company. The following risks relate to the operating environment: Regulatory and legislative risk (the effect on future profitability and/or cash flows) Competition Cyclical risk (business cycle) Access to the investment and lending market Market liquidity If realized, strategic risks may lead to losses, competitive disadvantage or reduction in capital adequacy, for example. These risks may also lead to reputation risk, i.e. that the company s reputation and trademark are adversely affected. Strategic risks are managed mainly through normal business planning and updating the company s strategic market positioning. Capital and pricing buffers reduce the business sensitivity to temporary disturbances, such as market function disturbances (market liquidity). The company s CEO and Board of Directors are responsible for the company strategic development and adaptation to regulatory changes in the market, and for proper monitoring of the company s market position. The Board and the CEO are also responsible for the company s communication strategy and oversight of business activities. Regulatory environment Regulation concerning the Group s business areas has increased in Finland. The company aims to predict forthcoming regulatory changes that can have a significant effect on business operations and profitability. Changes are typically known well in advance. The company has assessed the regulatory environment of other countries and is adjusting its activities to comply with the changing regulations in countries where business operations will be conducted. Internationalization The company is expanding its international operations, and there are risks involved in foreign operations. The company has decided to proceed cautiously in other markets and to minimize its foreign obligations so that they have no immediate significant impact on the volatility of the business operating profit. Due to the small size of the Finnish market, the relative volume of domestic business operations may decrease significantly in the long run. In the long term this should mitigate concentration risks related to a single market. OPERATIONAL RISK Operational risk is defined as the risk of financial or reputational loss due to insufficient or deficient internal processes, systems, human error, external incidents or compliance issues. Legal risk is defined as the risk of financial loss or sanction due to insufficient knowledge about laws and regulations or insufficient documentation or control of contractual issues. Operational risks include the following main areas: Personnel risk System risk Process risk External risk (crime, other events) Other operational risks can usually be traced back to these main risk drivers, as operational risks depend mostly on decisions made by people or on structural risks in systems and business processes. Operational risks are managed and mitigated in the company through the following measures: Proper governance based on documentation stating mandate, responsibility and reporting lines Clear and comprehensive risk reporting Follow-up and quality control of systems and processes Oversight including incident reporting and incident follow-up routines A functioning decision-making structure and correct incentives 46 EUROLOAN GROUP PLC ANNUAL REVIEW

46 Competence development for company employees Intra-Group transactions Significant business transactions between the Group companies are possible. These include the sale of receivables and lending within the Group. The transactions are conducted in the same way as with external parties. Therefore, the interest rate used in lending within the Group is the same as that used in external financing. For sales of receivables portfolios, market price is used. Corporate governance and reputational risk The company s dependency on key personnel has been actively mitigated through recruitment of experts and operational and administrative management, and through appointing professionals to the company s Board of Directors. The aim is to bring the company s administration to the level of best in class, thus reducing administrative risk. The consumer credit and collection business have received a lot of publicity. The company takes consumer protection and customer interest seriously. The principles and values of sustainable development are applied as publicly declared strict policy guidelines. The company s guidelines and policies regarding ethics, environment, risk management, consumer protection and information on how to avoid debt problems are available on the company s website in accordance with the principles of good corporate governance. The Group companies apply reasonable pricing that may limit the company s profit but is in line with the company s strategy emphasizing sustainable business operations. As stated in the open pricing principles for consumer services, Euroloan publishes its current price lists online for each service and market area. Depreciation and impairment The Group companies have assets in three main forms, which are cash, the receivables portfolio and business-critical information systems. For impairment of the receivables portfolio, see Credit risk below. The Group owns all intellectual property rights to its core business systems. The development costs of these systems have been capitalized in the consolidated balance sheet as intellectual property rights in non-current assets. Investments are depreciated according to plan and generally accepted accounting principles. Due to changes in business operations, regulation and the business environment, continuous investments are required to maintain the systems operational capacity. Major changes in the business environment may increase the need for investments and funding for investments. FINANCIAL RISK Liquidity risk The Group operates in capital-intensive business sectors. Loans, for example, are paid out in cash. This requires liquidity management and that the company has the cash available prior to the loan being granted. Liquidity risk is the risk that the company cannot at some point generate sufficient cash flows to meet outgoing cash flows to customers or to meet other obligations that demand liquidity. Liquidity risk normally arises when the cash flows from operations are not balanced. A sufficient payment readiness can be achieved and maintained for example by keeping a sufficient amount of cash or equivalent means or liquid resources immediately available or by matching payments and maintaining a stable and well diversified funding base. The Group companies external capital is mainly in the form of bonds and partly in the form of mainly fixed-term private or corporate bonds. Should an issue of new bonds fail, the company could experience liquidity problems and the conditions of existing bonds would have to be renegotiated. Of the risk factors, availability of capital is the most important with regard to business growth potential. Since most of the business costs are fixed costs, greater business volume increases profitability substantially. Correspondingly, costs must be cut if sufficient capital is not available. There is a refinancing risk associated with the company s business operations, that is, a risk that the company is unable to acquire sufficient capital at reasonable terms to be able to continue business activities. The company s liquidity risk is managed through set limits that are continuously monitored and reported to the company s operational management. The company s Board of Directors has also set what should be done at set threshold amounts regarding liquidity. EUROLOAN GROUP PLC ANNUAL REVIEW

47 There are several ways of managing the company s liquidity and related risks: Liquidity buffer the last resort for hedging against unexpected fluctuations in cash flows is to keep an adequate buffer on the company s bank accounts Limitation of lending operations Lending contracts may include clauses on partial or full recall of loans in case liquidity falls below permitted limits Increasing cost of financing Steering contract clauses Other financing sources Liquidity risks can be prevented through planning and control. Proper planning of future cash flows and funding needs is the best way to avoid liquidity risks. Cash needs are planned long term (monthly and yearly basis) through the budgeting process, forecasting and customer analysis. In the short term, adequate liquidity is reserved on a daily and weekly basis in the correct accounts. Credit risk Credit risk is a core risk in the Group s business sector. For unsecured consumer loans, for instance, it is likely that some debtors will not be able to repay the credit in full and on time. Credit risk arises in lending operations, investments and other business operations where future incoming cash flows are expected from counterparties. The company manages credit risk through careful counterparty screening (secure identification, control of repayment ability), spreading the counterparty risk across many counterparties, and through continuous extensive analysis of the credit portfolio and payment performance. Reliable valuation of receivables and credit pricing are important factors in managing credit risks. An adequate margin is required to cover operative cost, financing cost and credit risk as well as other risk. This helps in managing potential variation in counterparties payment behavior. Spreading the credit risk across tens of thousands of counterparties (consumer receivables) gives a stable level with little variance in total credit risk levels. Risks related to creditworthiness and payment behavior have been taken into account in pricing (cf. insurance operations where the amount of claims paid affects the price of premiums). Therefore, the credit risk is mainly due to unexpected variation in the customer s ability to meet their payment obligations. Independent of general economic trends, the payment behavior of the customer base as a whole has changed very little during the company s existence. To assess the credit risk and set credit limits, a risk assessment is made before lending, including the customer s credit rating, financial situation and cross-reference with earlier behavior statistics and other factors. The thresholds are set by the company s Board of Directors or the Risk Committee upon authorization by the Board of Directors. The utilization rate for credit limits are continuously followed up. Credit risks are continuously analysed, and the Company s Credit Committee has defined credit limits and principles for lending. Due to the automatic loan system in use, no exceptions from set limits and rules are made. Through analysis and continuous improvements in customer selection, the probability and effects of credit risks have been decreased significantly from the beginning of operations. Before buying receivables, the receivables portfolio in question is analyzed in detail. The purchase price is calculated based expected portfolio cash flows. The Group companies collect their own receivables. If the debtor is found to be permanently insolvent in court proceedings, the debt receivable is booked as a credit loss. Receivables that the company deems unrecoverable can also be booked as credit losses. For receivables booked as credit losses, the collection process can be continued or the receivables can be sold to another company (typically at a price less than the nominal value). INTEREST RATE RISK Euroloan s funding is secured at a fixed or variable interest rate, as are the company s loan receivables. This means that through balancing both sides correctly, the interest rate risk is minimal. Major changes in the general interest rate may affect the company s profitability. The changes must be very big to have an impact on operations, meaning that the operational interest rate sensitivity is rather small. Interest rate risk arises mainly from depositing surplus cash in banks, which have a lower interest rate than other investment options (such as lending operations). At the same time, this is the cost of limiting liquidity risks in the company, so the risks have to partly be weighed against each other to achieve a sustainable level for both. 48 EUROLOAN GROUP PLC ANNUAL REVIEW

48 Exchange rate risk The Group has assets in several countries with different currencies. Currency exposure mainly comes from capitalization and liquidity management in foreign currencies (mainly EUR, SEK and PLN). accepting and repaying deposits in different currencies. procurement of receivables in different currencies. corporate loans in different currencies. Using different currencies does not automatically mean exposure to exchange rate risk. Exposure arises when assets and liabilities in different currencies do not match, leading to an open currency position for the company. A nominal exchange rate risk also arises in accounting when assets in a foreign currency are calculated in the accounting currency, and when future business transactions are stated in a foreign currency which is not the accounting currency. Euroloan does not actively seek exchange rate risk exposure to make a profit, but to limit the risk. The company manages exchange rate risks mainly through balancing funding in different currencies with the business operation volumes. To limit the exchange rate risk exposure, derivatives can also be used to fix exchange rates. As a last resort, currency risk can also be managed through additional capital injection. This can be done if exchange rates change significantly and continuously in the same direction over a long period of time. Capitalization should be made in the currency that has the biggest expected exposure (i.e. if assets are denominated mainly in euro, equity input will also be made in euro). Specific risks associated with other Group companies EUROLOAN CONSUMER FINANCE PLC Euroloan Consumer Finance PLC is the Group s largest subsidiary by operating volume, having a significant impact on the risks and performance of the entire Group. A separate risk description for Euroloan Consumer Finance PLC is available on the company s website. The description also includes the risks for the Euroloan Consumer Finance PLC s subsidiaries. CRÉDITO COBRO LTD Compliance The collection business of the company is regulated and subject to license. Regulatory risk in this business is significant and has been partly realized through a decrease in the maximum allowed debt collection expenses. Future regulatory changes may have a significant effect on business operations and profitability. The company actively monitors regulatory changes with the aim to predict and prepare for future changes affecting the operations well in advance. Changes are typically known well in advance. As part of mitigation of regulatory risk, operations have been adapted to comply with regulations and costs have been cut to minimize profitability impact. The company has assessed the regulatory environment of other countries and will make any changes necessary to comply with regulations in countries where it intends to do business. Systems Modern debt collection requires functional information systems. Automation reduces relative cost as volumes increase. The company has invested significantly in modern collection systems and related services. There is an investment risk associated with low usage volume. The risk is mitigated by the fact that the collection systems developed can be utilized in other Group business areas. Risks associated with system usability have been mitigated through good quality control, testing and a sensible choice of platforms. Customerships The typical delay between the collection service sales efforts and the customer agreement causes a volume risk. Another risk associated with customerships are up-front costs. On the other hand, customerships are typically long-term agreements that last several years. Efforts to improve customer satisfaction also reduce the risk of losing customers. The company s goal is to offer the customers agreements that comply with industry standards, protect both parties and follow fair business practice. EUROLOAN GROUP PLC ANNUAL REVIEW

49 DIGNA IT OY A subsidiary of Crédito Cobro Ltd, Digna IT Oy develops collection systems and sells collection system licenses. Operational risks are associated with the above systems. Digna IT Oy s operations are very long-term and capital-intensive, causing investment profitability risks. Digna IT invests in high-quality systems, being, for instance, a Microsoft Silver Partner. System-related risk management is partly built on in-house system development expertise and capacity. CRÉDITO COBRO CAPITAL OY Crédito Cobro Capital Oy has no active operations, so the associated risks are the same as those associated with the Group. Risks associated with investing in the company CREDIT RISK Bonds and other investment products issued by the company do not include security of capital or separate collateral. Therefore, the investment products are associated with issuer credit risk. This means that the investor may lose the invested capital entirely or partly in the event of a company credit transaction such as a serious payment default, debt restructuring or bankruptcy, for example. ISSUER RISK Repayment of invested capital and profit carry a risk relating to the issuer s repayment ability. With the company being the issuer, the issuer risk is comparable to the issuer credit risk associated with bonds (see Credit risk ). The issuer risk refers to the risk of the issuer becoming insolvent and unable to meet its obligations. The investor may risk entirely or partly losing the invested capital and potential profit. SECONDARY MARKET AND LIQUIDITY RISK Secondary market risk refers to the risk that when the investor sells the investment before the agreed maturity date, the price may be higher or lower than the nominal value. In this case, the investor may not get back the entire capital invested. Bonds or other investment products issued by the company are primarily intended to be held until their respective maturity date. However, bonds may be sold before their maturity dates. The issuer will have no obligation to repurchase, but a third party can do so. In this case, the value of the investment loan may be lower or higher than its subscription price. The market price is affected by changes in market rates of interest, among other things. Selling the loan before its agreed maturity date also carries a liquidity risk, meaning that it may be difficult to find a buyer for the loan or that the price offered is lower than the actual value. Big market fluctuations, closing of trading venues or technical problems may affect the secondary market. TAXATION Any taxes related to the investment product are paid by the investor. Tax legislation and local taxation may change, which may have adverse effects for the investor. In isolated cases, investors would be well advised to seek advice from their tax consultant or tax authorities. 50 EUROLOAN GROUP PLC ANNUAL REVIEW

50 PARENT COMPANY S FINANCIAL STATEMENTS Income statement TURNOVER , ,59 Other operating income 660,50 387,13 Materials and supplies External services , ,00 Total , ,00 Personnel costs Salaries and benefits , ,37 Social security costs Pension costs , ,84 Other social security costs , ,93 Total , ,14 Depreciation and impairment Planned depreciation 3 192, ,06 Total 3 192, ,06 Other operating costs , ,83 OPERATING PROFIT (LOSS) , ,69 Financial income and expenses Dividend yield from Group companies 0, ,46 Other interest and financial income From Group companies , ,74 From others ,61 28,03 Total , ,77 Interest and other financial expenses To Group companies 5 547, ,67 To others , ,30 Total , ,97 Total , ,74 PROFIT BEFORE APPROPRIATIONS AND TAXES , ,95 Income taxes 4 606, ,14 PROFIT (LOSS) FOR THE FINANCIAL YEAR , ,81 Balance sheet ASSETS NON-CURRENT ASSETS Tangible assets Machinery and equipment 9 578, ,16 Other tangible assets 2 500, ,00 Total , ,16 Investments EUROLOAN GROUP PLC ANNUAL REVIEW

51 Holdings in Group companies , ,09 Total , ,09 NON-CURRENT ASSETS, TOTAL , ,25 CURRENT ASSETS Other current assets ,00 0,00 Total ,00 0,00 Receivables Short-term Sales receivables ,48 0,00 Receivables from Group companies , ,40 Loan receivables , ,00 Other receivables , ,30 Unpaid shares ,00 0,00 Accrued income , ,41 Total , ,11 Cash in hand and at bank , ,83 CURRENT ASSETS, TOTAL , ,94 ASSETS, TOTAL , ,19 EQUITY AND LIABILITIES EQUITY Share capital , ,00 Share issue ,00 0,00 Invested unrestricted equity reserve , ,65 Retained profit (loss) , ,83 Profit (loss) for the financial year , ,81 EQUITY, TOTAL , ,29 LIABILITIES Long-term Bonds , ,00 Total , ,00 Short-term Accounts payable , ,59 Liabilities to Group companies , ,00 Other liabilities , ,66 Prepayments and accrued income , ,65 Total , ,90 LIABILITIES, TOTAL , ,90 EQUITY AND LIABILITIES, TOTAL , ,19 52 EUROLOAN GROUP PLC ANNUAL REVIEW

52 NOTES TO THE PARENT COMPANY S FINANCIAL STATEMENTS PREPARATION OF THE FINANCIAL STATEMENTS Valuation principles and methods The company s non-current assets are valued at their variable acquisition cost. Periodization principles and methods The acquisition cost of fixed assets subject to wear and tear owned by the company is written off according to a prepared plan. Asset type Depreciation method/percentage Machinery and equipment Outlay residue write-off 25% INCOME STATEMENT Financial income and expenses Dividend yield from Group companies 0, ,46 Other interest and financial income From Group companies , ,74 From others ,61 28,03 Total , ,77 Interest and other financial expenses To Group companies 5 547, ,67 To others , ,30 Total , ,97 Financial income and expenses, total , ,74 ASSETS Machinery and equipment Book value at the beginning of the financial year , ,22 Planned depreciation 3 192, ,06 Book value at the end of the financial year 9 578, ,17 LIABILITIES Specification of equity Restricted equity Share capital At the beginning of the financial year , ,00 Additions 0, ,00 At the end of the financial year , ,00 Share issue EUROLOAN GROUP PLC ANNUAL REVIEW

53 At the beginning of the financial year 0,00 0,00 Additions ,00 0,00 Registered 14/10/ ,00 0,00 At the end of the financial year ,00 0, , ,00 Restricted equity, total Unrestricted equity Invested unrestricted equity reserve At the beginning of the financial year ,65 0,00 Additions , ,65 At the end of the financial year , , , ,83 Retained profit (loss) Profit (loss) for the financial year , ,81 Dividends paid , ,00 Accrued profits , ,64 Unrestricted equity, total , ,29 Distributable funds , ,29 INFORMATION ON A REPORTING ENTITY THAT IS PART OF THE GROUP Subsidiaries Euroloan Consumer Finance PLC, domicile Helsinki, is wholly-owned by Euroloan Group PLC. Crédito Cobro Ltd, domicile Helsinki, is wholly-owned by Euroloan Group PLC. Group financial statements have been consolidated in accordance with the current Accounting Act and prepared by the acquisition cost method. The consolidated financial statements are available at Euroloan Group PLC at Energiakuja 3, Helsinki, Finland. Receivables from Group companies Sales receivables , ,79 Accrued income 1 305,68 807,61 Loan receivables ,00 0,00 Other receivables 3 610,90 0,00 Total , ,40 Liabilities to Group companies Other liabilities 8 967, ,00 Prepayments and accrued income 2 001,55 0,00 Total , ,00 GUARANTEES AND COMMITMENTS Leasing agreement commitments Due next financial year , ,11 Due at a later date , ,56 Total , , EUROLOAN GROUP PLC ANNUAL REVIEW

54 Rental commitments Next financial year , ,58 Other commitments Rent security deposits paid , ,50 INFORMATION ON PERSONNEL AND MEMBERS OF GOVERNING BODIES Average number of employees Management s salaries and benefits , ,81 COMPANY SHARES Share capital by types of share and Articles of Association s main provisions regarding the types of share Series No. of shares Euro Votes/pcs A-serie ,65 1 B-serie ,00 0 C-serie ,00 0 D-serie 0 0,00 0 Owners of B- and C-serie shares are paid fixed monthly dividend but no other dividend. Share issues On the Annual General Meeting decided to create new series of shares. A-series was raised by shares at subscription price of 6,00 euros per share. Annual General Meeting decided also to offer 153 shares of company s new B-series at subscription price of 5 832,00 euros per share and 73 shares of new C-series at subscription price of 6 084,00 euros per share. All of these subscriptions have been disbursed to company s account. The share issues have been registered on and booked as equity. Also shares of A-series were offered to subscription at subscription price of 6,00 euros per share. This share issue has not been registered as new shares as EUR ,00 of the subscribed shares had not been paid by year end. This unpaid amount has been paid in full after the calendar year ended. BOARD S PROPOSAL ON MEASURES CONCERNING THE PROFIT FOR THE FINANCIAL YEAR Distributable funds in the financial statements amount to EUR ,08, of which the profit for the financial year is EUR ,79. No material changes have occurred in the company s financial position following the end of the financial year, based on section 13(2) of the Limited Liability Companies Act. During the financial year the company has paid dividends to B- and C-series shares total amount of EUR ,00. EUROLOAN GROUP PLC ANNUAL REVIEW

55 SIGNATURES TO THE FINANCIAL STATEMENTS 56 EUROLOAN GROUP PLC ANNUAL REVIEW

56 AUDITOR S REPORT EUROLOAN GROUP PLC ANNUAL REVIEW

57 AUDITOR S REPORT (Translation) 58 EUROLOAN GROUP PLC ANNUAL REVIEW

58 Euroloan Group is a rapidly growing international group, specialized in highly automated financial services and financial technology (Fintech). Euroloan Group PLC Energiakuja Helsinki Tel [email protected]