4finance investor presentation for 9 month 2015 results 10 November, 2015 0
meur meur Highlights Strong performance across the business Loan issuance up 33% Revenue up 39%, growth in all countries Net profit up 29% to EUR 51.3 million Continuing to invest for the future People, platforms, data analytics Marketing technology Revenue 229.3 +39% 164.5 Net profit +29% 51.3 39.7 Diversifying the business Launch of third product: Line of Credit Launch of Vivus brand in Argentina Strengthening management team Appointment of experienced Chief Risk Officer 9M 2014 9M 2015 9M 2014 9M 2015 1
Overview of 4finance European online and mobile lending leader Data and technology driven company Large scale >EUR 2.5 bn loans granted since inception in 2008 >4.3 million registered customers Diversification Operations in 13 countries, key markets: CEE, Baltics, Nordics Largest single country share in net loan portfolio: 24% Solid financial performance Profitable every month since end of 2009 45% return on equity, high equity to assets ratio Outstanding growth Revenue tripled in 2014 vs. 2012 EBITDA doubled during the same period Flexible business model Highly experienced management team 82% of assets are self-liquidating 90% of expenses are variable Extensive banking, asset management, risk and audit experience KEY FIGURES, M EUR 2012 2013 2014 9M 2015 Interest income 76 153 221 229 EBITDA (1) 38 69 83 79 Net profit 26 36 46 51 Total loans issued 309 538 805 791 Net loan portfolio (2) 110 178 241 299 Total equity 43 66 113 161 Net margin (3) 33% 23% 21% 22% Equity to assets ratio 35% 29% 35% 38% Credit ratings S&P: B+ stable Moody s: B3 Positive (1) EBITDA adjusted for income/ loss from discontinued operations, non-cash gains and losses attributable to movement in the mark-to-market valuation of hedging obligations under IFRS and goodwill write-offs (2) Gross loan portfolio less provisions for bad debts (3) Calculated as net profit (reported) to interest income 2
Diversification by geography and product 6% Revenue 3% 1% Poland Portfolio 11% 25% Latvia Lithuania Sweden 33% Single payment loans 7% Georgia Finland Instalment loans 13% 15% Spain Denmark 67% 8% 11% Czech Rep. Other Data for 9M 2015. Portfolio shows gross performing portfolio. 3
Clear and simple products Single payment loan Instalment loan Line of credit % in portfolio (1) 67% 33% n/a (initial launch September 2015) Loan amount EUR 5 2 010 EUR 50 3 846 Limit up to EUR 3 000 Term Up to 30 days Up to 36 months Open-ended revolving credit line Average loan size (1) 307 EUR 686 EUR n/a Fee structure Single fee payable at maturity Monthly interest payments Repayment in multiple instalments Minimum monthly repayment (MRP) Withdrawal fees Interest rate Monthly interest rate: 9% 33% (2) Nominal annual interest rate: 61.9% 108.0% (2) Monthly interest rate: 8.5% Extension Option to extend up to 30 days Extension fee payable before extension Option to reset scheduled repayment by a month Extension fee payable before extension Flexible payment options as long as MRP is met Customers can change their repayment date Markets Latvia, Lithuania, Finland, Sweden, Poland, Denmark, Georgia, Spain, Czech Republic, Bulgaria, Romania, Argentina Latvia, Lithuania, Finland, Sweden, Poland, Denmark, Armenia First launched in Finland Distribution channels Websites (mobile / tablet / web) Apple & Android native apps Phone call and SMS Offline: agents, loan shops and other partners Online / mobile (1) As of 30/09/2015 (2) Max term and max loan amount pricing 4
IT and data analytics: innovations released in 2015 Mobile apps: new sales channel, increased return rate Available in ios and Android Quicker signup, improved return rate, better service Full roll-out in progress Built using User Experience (UX) best practices from London UX team Risk systems: device fingerprinting, configurable rules Reducing fraud with device fingerprinting technology (Iovation) Building and deploying risk strategies without IT support using Experian Risk Suite Champion/Challenger scorecards Dynamic lending rules Configurable product features based on risk levels Partner app: channel diversification Partners can be added within seconds Full visibility on partner performance Customer applies with the agent Partner tracks sales & manages users Fully integrated into 4finance platform Fully international: roll-out to new countries in progress KYC engine for resellers: they can re-sell our loans New websites: higher conversions, increased organic traffic Available in majority of countries (mobile, tablet and PC) Uses latest tech stack for rapid development Built using UX best practices from London UX team Improved self-service features to reduce call center demand SEO Platform & UX A/B Testing Platform using Optimizely Extensive analytics with Web Trends 5
Strategy for sustainable growth Planned entry to Mexico Maintain market leadership in established core markets Strengthening foundation Continuous operational improvements, including adaptation to new regulation Big data: leverage existing proprietary database for product development Developing operations in recently entered markets: Romania, Armenia, Argentina Geographical expansion Sustainable growth Product roll-out Leveraging on technology AdTech for better targeting and product offering Continuous development of scoring systems Electronic wallet, card payment Line of credit already launched in Finland, planned in other markets New products planned, eg point of sale 6
Financial Review 7
Income statement INCOME STATEMENT, M EUR 9M 2014 9M 2015 % Change Interest income 164.5 229.3 39% Interest expense (16.4) (21.1) 29% Net interest income Net impairment losses on loans and receivables General administrative expenses 148.1 208.2 41% (41.7) (57.0) 37% (58.1) (89.0) 53% Other (expense)/income (0.3) (2.9) >100% Profit before tax 48.0 59.3 24% Tax (10.0) (13.3) 33% Net profit from continuing operations 38.0 46.0 21% Discontinued operations, net of tax 1.7 5.3 >100% Net profit 39.7 51.3 29% Cost to income ratio % 35% 39% Net Margin, % 24% 22% 8
Balance sheet BALANCE SHEET, M EUR 2014 9M'2015 % Change Loans and advances 241.4 299.1 24% Cash and cash equivalents 33.7 47.5 41% Other assets 94.9 77.1 (19%) Total assets 370.0 423.7 14% Loans and borrowings 231.6 226.9 (2%) Other liabilities 25.4 36.2 42% Total liabilities 257.0 263.1 2% Total equity 113.0 160.6 42% Total equity and liabilities 370.0 423.7 14% KEY RATIOS 2014 9M 2015 Equity/assets ratio (1) 35% 38% Equity/net loan portfolio 47% 54% Interest coverage ratio 3.5x 3.7x Return on average equity (2) 54% 45% (1) 2014 figure adjusted for effect of Notes defeasance (2) RoAE based on net profit from continuing operations 9
meur Non-performing loans analysis NPL Percentage of Total Loans Issued Portfolio Structure (30/09/2015) 1,800 90+: 36% (EUR 145m) 1,600 1,400 1,200 1,000 800 1,599 EUR 145 m 9.1% of total loans 1,453 21% 3% 4% 14% Not delay 8% 50% Delay 1-30 Delay 31-60 Delay 61-90 Delay 91-360 Delay 361-730 NPL Percentage of Total Loans Issued in previous 2 years 12.0% 600 10.0% 9.7% 9.2% 9.6% 9.5% 9.6% 8.8% 9.0% 8.9% 9.1% 8.0% 400 6.0% 200 4.0% 2.0% - Loan issued Jul 2013 - Jun 2015 (730 days) NPL as at 30 Sep 2015 Repaid and Performing Loans at Sep 30 2015 0.0% Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3'15 10
Asset quality and provisioning 45% 40% 35% 63.2% 67.1% 33.0% 33.2% 72.6% 69.2% 69.5% 35.2% 34.2% 33.8% 74.1% 73.6% 34.7% 35.8% 80% 70% 60% 30% 25% 20% 20.8% 22.2% 24.4% 23.8% 24.5% 25.7% 26.3% 50% 40% 15% 30% 10% 20% 5% 10% 0% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 NPL % Impairment % Coverage ratio 0% Coverage ratio = Overall allowance for impairment / non-performing loan portfolio 11
Loan portfolio cash flow Last 12 months: net incoming cash* 148m EUR 350 300 250 200 150 139 126 160 144 177 184 167 153 234 218 198 201 224 261 273 250 261 304 279 324 100 50 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015 Total outgoing cash Total incoming cash * From continuing operations 12
Solid credit metrics Capital / Assets (1) Net Debt / Adj.EBITDA (1) 38% 35% 29% 1.9x 1.6x 1.7x 2013 2014 9M 2015 2013 2014 9M 2015 Capital / Net Loans Interest Coverage (2) 54% 4.5x 47% 3.5x 3.7x 37% Comments Financial strength enhanced with increased capital to assets and capital to net loans Stable interest coverage Funding diversification with Swedish bond issuance of SEK 375m in 2015 from a programme of SEK 600m Focused on reducing cost of funds (12.2% in 9M15) Good cashflow generation Substantial headroom to bond covenants 2013 2014 9M 2015 2013 2014 9M 2015 (1) Adjusted to exclude the effect from 2015 Notes defeasance; (2) Calculated as adj.ebitda divided by interest expense 13