Delfin Group — Interim / Quarterly Report 2022

Aug 16, 2022

Unaudited results for 6 months Ending 30 June 2022

Company highlights

Business performance

Appendix

Key characteristics

employees

400 000+

customers

12 YEARS

profitable operations

business segments 4

Q2 highlights 1/2

1

EXPANSION

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

DIVIDEND DISTRIBUTION

During the Q2 shareholders of the company received 3 dividend payments in the total amount of EUR 2.7 million, namely EUR 0.0603 per share.

3

ESG REPORT 2021-22 PUBLISHED

In 2021 we covered CO2 emissions of 2,955 individuals in Latvia. Report available at DelfinGroup website.

BONDS

2

4

Listed EUR 10 million on Nasdaq First North alternative market. New bond issuance of EUR 10 million with coupon rate of 8.75% + 3M EURIBOR.

Q2 highlights 2/2

5

7

BRANCHES

Opening of a new branch in Olaine. Continuous modernization of branches and implementation of new branch concept.

LIFTING OF C-19 RESTRICTIONS

On 1 April Covid-19 restrictions were lifted that gave a positive impact on Banknote branch network sales results.

AWARDS

The Society Integration Foundation announced DelfinGroup as a Family-Friendly workplace that puts the priority on people and their needs.

8

6

SUPPORT FOR UKRAINE

Additional donation of EUR 100,000 to Children's Hospital Foundation and Entrepreneurs for Peace movement.

Company highlights

Business performance

Appendix

Selected financials

Financial report

Total loans issued

Net loan portfolio

Total revenue, quarterly cumulative

Profit before tax

Periods of COVID-19 restrictions in Latvia

Consumer loans

Financial report

8

Consumer net loan portfolio

Weighted average term of loans issued

Average loan*

Non-performing loan ratio

Periods of COVID-19 restrictions in Latvia

Pawn loans

Pawn net loan portfolio

Financial report

9

Average pawn loan amount

Redemption rate*

Lifting of Covid-19 restrictions starting from Q1 2022 gave a positive impact on pawn loan segment since the pawn loans are issued offline at Banknote branch network. Pawn loan issuance amounts in Q2 2022 already significantly exceeded pre-covid 19 levels.

Periods of COVID-19 restrictions in Latvia

Retail of pre-owned goods*

Financial report

Sale of pre-owned goods

Gross margin

Number of items sold

Sales split by product category (Q2 2022)

TV, audio, video, photo

• Jewellery
• Smartphones
• Game consoles
• Computer equipment
• Power tools
• Other

10

Consolidated income statement

INCOME STATEMENT, EUR'000	2022 Q2	2021 Q2	Change %	2022 6M	2021 6M	Change %
Total revenue	8,619	5,918	+46%	16,095	11,936	+35%
Cost of sales	-1,259	-1,015	+24%	-2,154	-1,763	+22%
Credit loss expense*	-1,432	-445	+222%	-2,711	-1,322	+105%
Interest expenses and similar expenses	-958	-852	+12%	-1,647	-1,863	-12%
Gross profit	4,970	3,607	+38%	9,584	6,989	+37%
Selling expenses	-1,686	-1,442	+17%	-3,443	-2,768	+24%
Administrative expenses	-1,346	-1,050	+28%	-2,626	-1,995	+32%
Other operating income	22	11	+104%	47	27	+71%
Profit before tax	1,960	1,125	+74%	3,561	2,253	+58%
Income tax expense	-742**	-299	+148%	-930	-623	+49%
Net profit	1,218	826	+47%	2,631	1,630	+61%
EBITDA	3,210	2,241	+43%	5,791	4,640	+25%

* For the purpose of comparison, other operating expenses are reclassified to credit loss expense as major part of other operating expenses are losses from cession of non-performing loans (debt sales). ** Higher income tax expenses in Q2 2022 due to additional annual dividend payment to company shareholders.

Consolidated balance sheet

BALANCE SHEET, EUR'000	30.06.2022	31.12.2021	Change %
Fixed and intangible assets	1,351	1,201	+12%
Right-of-use assets	2,773	2,973	-7%
Net loan portfolio	53,775	42,962	+25%
Inventory and scrap	2,329	1,949	+19%
Other assets	364	520	-30%
Cash	2,314	2,460	-6%
TOTAL ASSETS	62,906	52,065	+21%
EQUITY	16,025	17,377	-8%
Share capital and reserves	4,532	4,532	0%
Share premium	6,891	6,891	0%
Retained earnings	4,602	5,954	-23%
LIABILITIES	46,881	34,687	+35%
Interest-bearing debt	40,477	29,412	+38%
Trade payables and other liabilities	3,307	1,970	+68%
Lease liabilities for right-of-use assets	3,096	3,305	-6%
TOTAL EQUITY AND LIABILITIES	62,906	52,065	+21%

Financial ratios

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

7.5% 8.3%

Q3 Q4 Q1 Q2

10.0%

2022

Cost of interest-bearing liabilities

12.3% 12.7% 12.2% 11.1% 10.7%

Q4 Q1 Q2

Q3 2020

Decrease of ROE in 2022 is a result of increased equity after attracting funds during the IPO process.

Interest coverage ratio*

ROE**

Higher financing costs related to overall interest rate increase in capital markets and on Mintos P2P platform. Since DelfinGroup has diversified financing structure it is easier to switch between more favorable source of funding.

2021

*Last 12 months figures. **Annualized. 13

Capital structure

Financial report

Bond financing track record

DelfinGroup on Mintos

• Since 2016
• 104 thousand active investors
• Investors from 114 countries

On July 2022 DelfinGroup registered new bond issue in the amount of EUR 10 million with annual coupon rate of 8.75% + 3M EURIBOR and maturity 25 September 2024. Bond issue is a private placement and subscription period is currently open.

Diversification Financial report

Revenue by business segments 6M 2022

Although largest part of revenue stream comes from consumer loan segment we see a great potential in gradually growing other DelfinGroup segments

Distribution of active clients by age on 31 March 2022*

2% 15% 21% 18% 16% 16% 12% 18-19 20-29 30-39 40-49 50-59 60-69 70+

DelfinGroup products cover all of the 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 distribution

Dividend period	Dividend payment date	EUR/share	EUR total	Payout ratio*
Q2 2022	September 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%

Annual 2021 17.05.2022 15.07.2022 0.0552 2 501 642 -

Dividend yield of 7.7%***

*Dividend amount paid from the net profit of the respective quarter. **Proposed dividends from the Management Board of DelfinGroup. Payment subject to Shareholders meeting decision. ***Dividend yield calculated based on DelfinGroup share price on 4 August 2022 and including management's proposed dividend from Q2 2022 profit in paid dividend calculation. 16

Share performance

Share dynamics compared to indexes

30.06.2022	DelfinGroup	Financial industry**
Capitalization m €	64.4	-
EPS TTM €*	0.120	-
P/E	11.8	12.2
ROE	28.6%	15.2%

DGR1R – DelfinGroup OMX_Baltic_Benchmark_GI OMX Riga_GI

*Calculations based on weighted average of total outstanding shares that increased in 2021 due to stock split and listing of new public shares. **Average ratio for financial services companies listed on Nasdaq Baltic Main list on 30.06.2022.

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