Delfin Group

Investor Presentation • Nov 9, 2022

Unaudited results for 9 months Ending 30 September 2022

Company highlights

Business performance

Appendix

Key characteristics

founded in 2009

branches 90+

cities 38

registered clients 400 000+

shareholders 5 000+

employees 300+

business segments 3

active clients 50 000+

mEUR net loan portfolio 59.7

dividend payments per year 5

bond issues 8

profitable operations 12 YEARS

Recent highlights 1/2

1

INCREASE OF STOCK FREE FLOAT

The free float of DelfinGroup stock reached 15% after the public share offerings of the largest company's shareholders.

DIVIDEND DISTRIBUTION

During the Q3 shareholders of the company received 2 dividend payments in the amount of EUR 1.86 million, namely EUR 0.041 per share.

3

ONLINE STORE

The largest circular economy online store was renewed. It has more than 40 000 products available, and the range of products is updated daily.

BONDS

2

4

New bond emission of 10 mEUR with a coupon rate of 8.75% + 3M EURIBOR and maturity September 2024. The minimum subscription amount is EUR 100 000.

Recent highlights 2/2

5

7

ANALYST COVERAGE

LHV Pank and Enlight Research published coverage of DelfinGroup and set fair value range for the company's stock. Reports are available on DelfinGroup website.

EXPANSION

Loan portfolio acquisition of six pawnshop branches of the Finance 360 pawnshop partnership.

AWARDS

Four Banknote branches received the honorary title of Laureate in the service quality assessment competition Best Trader of Latvia.

8

6

SUPPORT FOR UKRAINE

An additional donation of EUR 50 000 was approved to TEV association to arrange and deliver the necessary things to the people in eastern Ukraine.

Company highlights

Business performance

Appendix

Selected financials

Total loans issued

Net loan portfolio

Total revenue, quarterly cumulative

Profit before tax

Consumer loans

Financial report

Consumer net loan portfolio

Weighted average term of loans issued

Average loan*

Non-performing loan ratio**

Pawn loans

Financial report

Pawn net loan portfolio

Average pawn loan amount

Redemption rate*

The pawn loan segment continues to show significant improvements after lifting Covid-19 restrictions in Latvia starting from Q2 2022. As a result, pawn loan issuance amounts have already significantly exceeded pre-covid 19 levels.

Retail of pre-owned goods*

Financial report

Sale of pre-owned goods

Gross margin

Number of items sold Sales split by product category (Q3 2022)

Consolidated income statement

INCOME STATEMENT, EUR'000	2022 Q3	2021 Q3	Change %	2022 9M	2021 9M	Change %
Total revenue	9,564	6,463	+48%	25,659	18,399	+39%
Cost of sales	-1,312	-849	+55%	-3,465	-2,611	+33%
Credit loss expense*	-1,584**	-827	+91%	-4,055	-2,157	+88%
Interest expenses and similar expenses	-1,390	-918	+51%	-3,037	-2,782
Gross profit	5,279	3,868	+36%	15,102	10,849	+39%
Selling expenses	-1,939	-1,524	+27%	-5,382	-4,292	+25%
Administrative expenses	-1,477	-1,018	+45%	-4,102	-3,013	+36%
Other operating income	21	29	-28%	67	56	+20%
Other operating expenses*	-60	-128 -53%		-299	-120	+150%
Profit before tax	1,825	1,227	+49%	5,386	3,480	+55%
Income tax expense	-154	-201	-24%	-1,084	-824	+32%
Net profit	1,671	1,026	+63%	4,302	2,656	+62%
EBITDA	3,518	2,400	+47%	9,308	7,041	+32%

* For the purpose of comparison, losses from cession of non-performing loans (debt sales) are reclassified from other operating expenses to credit loss expense.

**Due to the fast-growing loan portfolio, credit loss expenses have grown alongside it.

Consolidated balance sheet

BALANCE SHEET, EUR'000	30.09.2022	31.12.2021	Change %
Fixed and intangible assets	1,387	1,201	+15%
Right-of-use assets	2,783	2,973	-6%
Net loan portfolio	59,676	42,962	+39%
Inventory and scrap	2,699	1,949	+38%
Other assets	1,333*	520	+157%
Cash	4,010	2,460	+63%
TOTAL ASSETS	71,888	52,065	+38%
EQUITY	17,089	17,377	-2%
Share capital and reserves	4,532	4,532	0%
Share premium	6,891	6,891	0%
Retained earnings	5,666	5,954	-5%
LIABILITIES	54,799	34,687	+58%
Interest-bearing debt	49,704	29,412	+69%
Trade payables and other liabilities	1,999	1,970	+1%
Lease liabilities for right-of-use assets	3,097	3,305	-6%
TOTAL EQUITY AND LIABILITIES	71,888	52,065	+38%

*Larger increase of position "Other debtors" due to a one-off cession deal with payment in October 2022.

38.8%

2022

Financial ratios

EBITDA margin*

Changes in equity ratio was mainly impacted by faster growth of loan portfolio and larger annual dividend payment in Q2.

Cost of interest-bearing liabilities

Equity ratio

Higher financing costs related to overall interest rate increase in capital markets and on Mintos P2P platform.

Interest coverage ratio*

35.5% 37.6%

Q1 Q2 Q3

42.2%

ROE**

Q4 2020

45.2% 46.7%

2021

32.0% 29.2%

Q4 Q1 Q2 Q3

Cost-to-income ratio*

**Annualized. Periods of COVID-19 restrictions in Latvia

*Last 12 months figures.

Capital structure

Capital structure, Q3 2022

Bond financing track record

DelfinGroup on Mintos

• Since 2016
• 69 000 active investors
• Investors from 114 countries

* Latest bond emission registered in the amount of EUR 10 million and 2Y maturity. The bond issue is a private placement, and the subscription period is open. As of 30 September 2022, EUR 3.9 million has been subscribed.

Diversification

Although the most significant part of the revenue stream comes from the consumer loan segment, we see great potential in gradually growing other DelfinGroup segments.

Revenue by business segments 9M 2022

Distribution of active clients by age on 30 September 2022*

DelfinGroup products cover all age groups thanks to customized financial solutions.

*Active consumer lending segment clients

Dividends

Unique dividend distribution proposal in Baltics

Up to 5 dividend payments per year:

• 4 quarterly
• 1 annual

Quarterly dividends

• Up to 50% from previous Q profit Annual dividends
• In amount to ensure optimal capital structure

Dividend yield of 8.3%*

Dividend period	Dividend payment date	EUR/share	EUR total	Payout ratio***
Q3 2022	December 2022**	0.0184	833 881	49.90%
Q2 2022	30.09.2022	0.0134	607 283	49.87%
Q1 2022	29.06.2022	0.0155	702 454	49.69%
Q4 2021	12.04.2022	0.0172	779 497	49.72%
Q3 2021	29.12.2022	0.0113	512 111	49.91%
Dividend period	Dividend payment date	EUR/share	EUR total
Annual 2021	17.05.2022 15.07.2022	0.0552	2 501 642

*Dividend yield calculated based on DelfinGroup share price of EUR 1.45 on 4 November 2022 and including management's proposed dividends from Q3 2022 profit for TTM dividend calculation. **Proposed dividends from the Management Board of DelfinGroup. Paymentis a subject to Shareholders meeting decision. ***Dividend amount paid from the net profit of the respective quarter.

Share performance

Share price, €

Share dynamics compared to indexes

DGR1R – DelfinGroup
OMX_Baltic_Benchmark_GI
OMX Riga_GI

*Calculations based on weighted average of total outstanding shares that increased in 2021 due to listing of new public shares. **Average ratio for financial services companies listed on Nasdaq Baltic Main list on 30.09.2022.

30.09.2022	DelfinGroup	Financial industry**
Capitalization m €	65.5	-
EPS TTM €*	0.131	-
P/E	11.0	11.87
ROE	38.8%	15.1%

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Company highlights

Business performance

Appendix

Consolidated income statement Financial report

BALANCE SHEET, EUR'000	2019*			2020*			2021				2022
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Total revenue	4,936	5,429	5,951	5,861	6,020	5,195	5,788	6,659	6,018	5,918	6,463	7,089	7,476	8,619	9,564
Cost of sales	-756	-856	-1009	-982	-1215	-961	-993	-1,055	-748	-1,015	-849	-1,057	-894	-1,259	-1,312
Credit loss expense*	-381	-618	-640	-801	-674	-391	-255	-805	-735	-595	-827	-240	-1,163	-1,308	-1,584
Interest expenses and similar expenses	-536	-664	-739	-914	-823	-887	-808	-1,115	-1,011	-852	-920	-1,044	-689	-958	-1,390
Gross profit	3,263	3,291	3,563	3,164	3,308	2,956	3,733	3,684	3,524	3,457	3,868	4,747	4,729	5,094	5,279
Selling expenses	-1,185	-1,420	-1,325	-1,496	-1,342	-1,155	-1247	-1,703	-1,326	-1,442	-1,524	-1,832	-1,757	-1,686	-1,939
Administrative expenses	-707	-863	-876	-1,042	-855	-776	-865	-765	-945	-1,050	-1,018	-1,200	-1,279	-1,346	-1,477
Other operating income	6	52	16	21	4	25	16	28	16	11	29	29	24	22	21
Other operating expenses*	-27	-25	-55	-92	-51	-48	-48	-45	-142	150	-128	-21	-116	-123	-60
Profit before tax	1,350	1,035	1,323	555	1,064	1,002	1,588	1,199	1,128	1,125	1,227	1,723	1,601	1,960	1,825
Income tax expense	-338	-2	-3	-7	-26	-7	-462	-259	-324	-299	-201	-155	-188	-742	-154
Net profit	1,012	1,033	1,320	548	1,038	995	1,126	940	804	826	1,026	1,568	1,414	1,218	1,671
EBITDA	1,915	1,784	2,112	2,376	2,110	2,155	2,659	2,629	2,399	2,241	2,402	3,126	2,581	3,210	3,518

* For the purpose of comparison, losses from cession of non-performing loans (debt sales) are reclassified from other operating expenses to credit loss expense.

Consolidated balance sheet Financial report

BALANCE SHEET, EUR'000	2019				2020				2021				2022
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Fixed and intangible assets	652	621	775	691	748	860	927	1,038	864	818	790	1,201	1,301	1,351	1,387
Right-of-use assets	-	-	-	2,049	1,950	3,056	2,928	3,194	3,281	3,145	3,013	2,973	2,915	2,773	2,783
Loans to related parties	1,295	1,389	1,397	1,308	1,376	1,381	376	474	445	-	-	-	-	-	-
Net loan portfolio	20,761	26,609	29,474	31,547	32,493	32,256	34,040	34,674	32,220	33,265	38,182	42,962	47,091	53,775	59,676
Inventory and scrap	1,111	1,173	1,231	1,155	1,224	1,186	1,545	1,534	1,693	1,533	1,797	1,949	2,138	2,329	2,699
Other assets	339	256	231	384	503	536	365	655	495	331	746	520	541	364	1,333
Cash	2,686	469	1,296	1,136	2,037	1,958	2,434	4,592	1,907	594	2,541	2,460	1,704	2,314	4,010
TOTAL ASSETS	26,844	30,517	34,404	38,270	40,331	41,233	42,615	46,161	40,905	39,686	47,069	52,065	55,690	62,906	71,888
EQUITY	5,466	6,499	7,819	8,367	9,405	10,401	9,513	9,454	8,639	8,108	8,696	17,377	18,011	16,025	17,089
Share capital and reserves	1,500	1,500	1,500	1,500	1,500	1,500	4,000	4,000	4,000	4,000	4,000	4,532	4,532	4,532	4,532
Share premium	-	-	-	-	-	-	-	-	-	-	-	6,891	6,891	6,891	6,891
Retained earnings	3,966	4,999	6,319	6,867	7,905	8,901	5,513	5,454	4,639	4,108	4,696	5,954	6,589	4,602	5,666
LIABILITIES	21,378	24,018	26,585	29,903	30,926	30,832	33,102	36,708	32,266	31,578	38,373	34,687	37,678	46,881	54,799
Interest-bearing debt	20,023	22,832	25,311	26,438	27,316	25,586	27,575	31,151	26,894	26,360	33,290	29,412	31,644	40,477	49,704
Trade payables and other liabilities	1,355	1,186	1,274	1,337	1,596	2,047	2,418	2,121	1,798	1,765	1,751	1,970	2,788	3,307	1,999
Lease liabilities for right-of-use assets	-	-	-	2,128	2,014	3,199	3,109	3,436	3,574	3,453	3,332	3,305	3,246	3,096	3,097
TOTAL EQUITY AND LIABILITIES	26,844	30,517	34,404	38,270	40,331	41,233	42,615	46,161	40,905	39,686	47,069	52,065	55,690	62,906	71,888

Sustainability DelfinGroup ESG report for 2021/2022 available here.

Promotion of circular economy

• Prolonged life-cycle of consumer goods
• Largest online store of pre-owned and tested items in Latvia

Inclusive society

• The most geographically available financial institution in Latvia
• Serving the underserved customer segments
• Inclusive workplace

Sustainable corporate governance

• 3 independent members of the Supervisory Board
• Independent internal audit unit

Relevant UN Sustainable Development Goals:

Historic timeline

Highly appreciated company

Definitions for Alternative Performance Measures*

EBITDA

Earnings before interest, taxes, depreciation and amortization = (Profit before tax) + (Interest expenses and similar expenses) + (Rights of used assets depreciation) + (Depreciation of fixed assets) + (Amortization). Used as a measure of corporate performance as it shows earnings before the influence of accounting and financial deductions.

EBITDA Margin

Operating profitability as a percentage of its total revenue, calculated as EBITDA / (Interest income + Gross profit from sale of foreclosed items). Used as a profitability measure that is factoring out the effects of decisions related to financing and accounting.

Interest Coverage Ratio

Profitability and debt ratio, calculated as ((Profit before corporate income tax) + (Interest expenses and similar expenses) / (Interest expenses and similar expenses). Used to determine how easily a company can pay interest on its outstanding debt.

Cost-to-income Ratio

((Sales expenses) + (Administrative expenses) + (Other expenses (excluding Loss from cession (debt sales) of non-performing loans)) ) / ((Net sales) – (Cost of sales) + (Interest income and similar income) + (Other operating income) – (Interest expenses and similar expenses))

Return on Equity (ROE)

Net profit for the period/months in the period*12 / ( ((Equity as at start of the period) + (Equity as at period end)) / 2)

Total revenue

Net sales + Interest income and similar income. Represents income generated by Company's business segments.

Interest-Bearing Debt

Liabilities that require the payment of interest, including bonds, other loans, leasing liabilities etc. Interest-Bearing Debt has a priority over other debts.

Cost of interest-bearing liabilities

Weighted average nominal interest rate calculated by amount of interest bearing liabilities as at period end

Equity ratio

Equity/Total assets

Non-performing loan ratio

90+ days overdue portfolio share in consumer loan portfolio

The goal of alternative performance measures is to provide investors with performance measures that are widely used when making investment decisions and comparing the performance of different companies.

* As stipulated by FCMC Regulations on Alternative Performance Measures

Disclaimer

This presentation is of selective nature and is made to provide an overview of the Company's (AS DelfinGroup and its subsidiaries) business.

Unless stated otherwise, this presentation shows information from consolidated perspective.

Facts and information used in this presentation might be subject to revision in the future. Any forward-looking information may be subject to change as well.

This presentation is not a legally binding document, and the Company has no liability for any direct or indirect loss from the use of this presentation.

This presentation does not intend to contain all the information that investors may require in evaluating the Company. Investors should read publicly available information regarding the Company to make an investment decision.

AS DelfinGroup

Skanstes street 50A Riga, Latvia, LV-1013

IR@delfingroup.lv (+371) 26 18 99 88 www.delfingroup.lv