4finance Investor Presentation June 2018
Disclaimer While all reasonable care has been taken to ensure that the facts stated herein are accurate and that the forecasts, opinions and expectations contained herein, are fair and reasonable, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. Neither 4finance nor any of 4finance`s advisors or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. This presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this document, which neither 4finance nor its advisors are under an obligation to update, revise or affirm. The distribution of this presentation in certain jurisdictions may be restricted by law. Persons into whose possession this presentation comes are required to inform themselves about and to observe any such restrictions. The following information contains, or may be deemed to contain, “forward -looking statements” . These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures, future cash sources and requirements, liquidity and cost savings that involve known and unknown risks, uncertainties and other factors that may cause 4 finance’s or its businesses’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, such forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. All forward-looking statements made in this presentation are based on information presently available to management and 4finance assumes no obligation to update any forward-looking statements. 2
Topics • The Market Opportunity • The Business Today • Our Areas of Focus • Financial summary • Conclusion 3
The opportunity for 4finance is significant • There are c.2.6 billion financially underserved across the world, including a large ‘ aspirational near-prime ’ segment of c.500 million that remains hard to credit score/serve, but represents a promising opportunity for 4finance, in line with our core skill-sets • This aspirational near-prime group is made up of to two main communities: • Millennial generation , still possessing limited credit histories, that is changing fundamental expectations around how financial products are designed and served, breaking old conventions • Fast growing, aspirational and increasingly affluent middle class in emerging markets , exhibiting strong demand for financial products and services they have historically not been able to access • Breakthroughs in data science, analytics, low cost cloud computing and artificial intelligence are unlocking the ability to credit score and serve these historically underserved • Ubiquitous/inexpensive mobile internet access allows the delivery of sophisticated mobile financial products anytime and anywhere • With our size, scope, expertise and financial strength, 4finance is uniquely poised to take advantage of this opportunity 4
Why 4finance is uniquely positioned • Unique scale and expertise • Well capitalised, disciplined and profitable Unique scale Multi-product multi- Well capitalized, • Convenient, simple & transparent products with a mobile-first and expertise region experience profitable, financially focus, and a growing expertise in serving millennials disciplined • Deep expertise in scoring customers with limited or no credit history • Increasingly diverse product suite capable of helping customers mitigate short term cash flow needs, fund longer term and more Simple, Mobile Deep scoring aspirational purchases and save for the future transparent friendly expertise products • Automation and self service capabilities that allow us to offer small ticket sizes efficiently and economically • Access to a network of strategic partnerships and/or acquisitions that can enable us to offer new products, new capabilities, new channels Increasingly Automation and self Access to strategic diversified service capabilities partnerships product suite 5
Successful track record… € 5,600,000,000+ 400,000+ 37,000,000+ Online lending active customers (1) Loans issued Online applications reviewed >3,400 5 15 81% Main lending Countries 31/03/2018 31/03/2018 returning products, with of operation full time customer business (2) EU licensed bank employees Profit before tax Interest income € m € m 81 448 74 393 57 (Normalised) 60 318 220 124 105 11 17 15 (reported) 2014 2015 2016 2017 3M 2017 3M 2018 2014 2015 2016 2017 3M 2017 3M 2018 Note: 6 (1) Online lending customers with open loans that are up to 30 days past due See appendix for definitions of key metrics and ratios (2) Issuance volumes to customers who have returned, ie taken out and repaid at least one prior loan
…and continuing progress in Q1 2018 Interest Instalment loan Pre-provision income operating profit issuance 2.2x +28.0% +18.0% YoY YoY YoY Adjusted Cost to Gross EBITDA income ratio NPL ratio €32. 1m 54.0% 19.5% 4% improvement YoY 7% improvement QoQ +13% QoQ 7
The Business Today 8
Clear and simple product range Deposit products Consumer lending products Line of Single Instalment Credit / Point of Sale Bank Non-bank Payment loan loan Credit Card % of net receivables (1) 34% 3% 44% 11% 95% 5% €350 € 1,200 € 850 € 500 € 100k guarantee limit € 5,250 limit Typical amount Typically 3 – 36 months Up to 1 – 5 years Term Up to 30 - 65 days Open-ended revolving Current accounts and term Current and term deposits (up depending on market credit line depending on market depending on market deposits (6 months av. term) to 3 years) Payment type Single payment Minimum monthly Repayment in fixed Repayment in fixed Annual or at maturity Annual or at maturity encompassing the principal repayment & flexible monthly instalments with monthly instalments repayment and loan fee additional repayment amortising principal Pricing Monthly interest rates: Monthly interest rates: Annual interest rates: Annual interest rates: Annual rate: 0.5% - 2.6% Annual rate: 6.5% - 10% 5% - 33% in Europe c.3% (credit cards) 35% - 60% in LT, BG, RO c.30% in Spain 30% – 50% in BG, RO 40% in LatAm (inc VAT) 7%-8.5% (online LOC) 60% - 100% in others Extension Option to extend up to 30 Flexible payment options Option to delay the monthly n/a n/a n/a days (payable up front) as long as minimum instalment by one month Minimum-to-pay format in monthly payment is met some markets Markets All 15 markets Bulgaria, Romania, 11 markets Bulgaria, Romania, Bulgaria, Romania Sweden Finland, Latvia Spain 9 Note: (1) Net receivables as of 31/03/2018. Remaining 8% of net receivables is SME lending within TBI Bank
Diversification by product and geography 3M2018 interest income: € 124m 3M2018 n et receivables: € 549m 59% online / 41% banking Other Bank (SME) Latvia Argentina 3% Lithuania 8% 7% 2% Romania 2% Finland 7% Point of Sale 4% Single Payment 11% Sweden Loans 4% Bulgaria 34% 10% (of which 7% ‘minimum to pay’) Czech Republic 5% Poland 27% Spain Line of Credit / 17% Cards Instalment loans 3% 44% Georgia Denmark 3% 9% 10 Note: Interest income from TBI Bank and Friendly Finance is allocated within the corresponding country
Our customers Trust Pilot (1) score by countries Most common customer characteristics: 9.7 9.6 • Has at least one bank account • Underserved by traditional banks 9.3 9.1 9.1 8.2 • Expenditure matches monthly • Uses financing for lifestyle choices income or necessities 1 loan • Little or no savings • Seeking transparency, speed and 4 and more loans efficiency. • Limited credit history • Loyal - 81% of loans are issued to 3 loans 2 loans vivus.pl vivus.dk vivus.fi vivus.se zaplo.pl zaplo.dk • Employed, self employed or retired returning customers (31/03/2018) Note: (1) Trust Pilot score (scores out of 10) Applications by source Client split by age (31/03/2018) 35% 30.3% 8.0% 30% 8.6% Desktop 25% 22.9% 33.5% 20% 48.4% Mobile 16.8% 15% 43.6% 11.9% 10.7% Other 57.9% 10% 6.7% 5% 0.8% 0% 18-20 21-24 25-29 30-39 40-49 50-59 60+ Q1 2017 Q1 2018 11
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