Delfin Group — Interim / Quarterly Report 2023

May 10, 2023

Financial report

Unaudited results for 3 months Ending 31 March 2023

Company highlights

Business performance

Appendix

Financial report

Key characteristics

Q1 revenue growth y-o-y +46%

Q1 EBITDA growth y-o-y +53%

Q1 profit before taxes growth y-o-y +16%

Q1 net loan portfolio growth y-o-y +53%

years profitable operations 13

active clients 58k+

branches 90+

employees 350+

items for sale in online store 50k+

of items purchased directly from clients and B2B partners 49%

shareholders

dividend payments in 2022 6

Recent highlights

1

OPENING OF BANKNOTE XL

The largest store of pre-owned goods was opened in Riga with an area of 300 m2. There are more than 4 500 new and preowned goods available on-site.

DIGITALISATION OF SERVICES

Introduction of Smart ID and digital signature for remote identification of clients to receive consumer lending services.

³ DIVIDEND DISTRIBUTION

On 17 April shareholders received dividends in the amount of EUR 838 thousand, namely EUR 0.0185 per share from Q4 2022 net profit.

SUSTAINABILITY

2

4

On 1 April, 45 DelfinGroup premises switched to renewable energy sources, thus lowering CO2 emissions made by company's operations.

Company highlights

Business performance

Appendix

Key results

Total loans issued

Total revenue, quarterly cumulative

Net loan portfolio

Profit before tax, quarterly cumulative

Strong new loan issuance in Q1 2023 secured a stable loan portfolio increase, thus reaching an all-time high of EUR 73.5 million, a 53% increase.

The company had a 46% revenue increase in Q1 2023, facilitated by the growth of all major business segments.

Profit before tax in Q1 reached EUR 1.8 million, an increase of 16% year on year.

Periods of COVID-19 restrictions in Latvia

Consumer loans

Weighted average term of loans

Financial report

Consumer net loan portfolio

Average loan*

Non-performing loan ratio**

Eminent growth of consumer lending segment. The net loan portfolio continued growth during Q1 2023 reaching 67.7 million euros.

56% increase of consumer lending portfolio in compared to Q1 2022.

Data based underwriting processes ensure solid NPL ratio.

Q1 2021

issued

Periods of COVID-19 restrictions in Latvia

*Average consumer loan balance for one client at the end of period. **Increase in Q3 2022 NPL ratio due to reversal of a cession portfolio. Data from older periods restated as per corrections made in 2022 audited annual report.

Age analysis of consumer lending portfolio*

Loan portfolio quality remains solid with slight improvements in Q1 2023.

Improved underwriting processes and risk policy.

Pawn loans

Financial report

Pawn net loan portfolio*

Average pawn loan amount

Redemption rate**

Pawn lending segment continue to show stable growth. 44% increase of the pawn loan portfolio year on year.

Redemption rate of pledged items remain stable, above 70% over the recent years.

* Active portfolio excluding portfolio part where collateral is available for sale ** Items redeemed or extended within 2 months since issuance Data from older periods restated as per corrections made in 2022 audited annual report.

Periods of COVID-19 restrictions in Latvia

Retail of pre-owned goods*

Financial report

Sale of pre-owned goods**

Gross margin

43% growth in Q1 2023 year on year.

Sales remain stable over the last 3 quarters as the segment has become a strategic priority for the company.

Gross margin remain stable throughout the last years

*Excluding wholesale of precious metals (scrap). **Including directly purchased goods from clients and unredeemed items from pawnshop. Data from older periods restated as per corrections made in 2022 audited annual report.

Periods of COVID-19 restrictions in Latvia

Sales split by product category

Sales split by product category (3M 2023)

Clients have access to a wide range of pre-owned goods at Banknote online store and branch network.

The most demanded product categories are electronics, such as smartphones, computers, TVs and jewelry.

Consolidated income statement Financial report

INCOME STATEMENT, EUR'000	2023 Q1	2022 Q1*	Change %
Total revenue	11,082	7,586	+46%
Cost of sales	-1,443	-780	+85%
Credit loss expense	-2,145	-1,410	+52%**
Interest expenses and similar expenses	-1,792	-689	+160%***
Gross profit	5,702	4,707	+21%
Selling expenses	-2,062	-1,757	+17%
Administrative expenses	-1,766	-1,280	+38%
Other operating income	15	24	-38%
Other operating expenses**	-64	-115	-44%
Profit before tax	1,825	1,579	+16%
Income tax expense	-212	-188	+13%
Net profit	1,613	1,391	+16%
EBITDA	3,923	2,559	+53%

* Data reflected according to restated comparatives in the latest financial statements.

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

*** Increase of interest expenses due to increasing interest rates in capital markets and growing loan portfolio which is partially financed with debt.

Consolidated balance sheet Financial report

BALANCE SHEET, EUR'000	31.03.2022	31.12.2022*	Change %
Fixed and intangible assets	1,595	1,470	+8%
Right-of-use assets	2,698	2,636	+2%
Net loan portfolio	73,453	67,518	+9%
Inventory and scrap	3,909	2,290	+71%
Other assets	1,042	875	+19%
Cash	2,398	2,369	+1%
TOTAL ASSETS	85,095	77,158	+10%
EQUITY	18,915	18,106	+4%
Share capital and reserves	4,532	4,532	+0%
Share premium	6,891	6,891	+0%
Other capital reserves	128	93	+38%
Retained earnings	7,364	6,590	+12%
LIABILITIES	66,180	59,052	+12%
Interest-bearing debt	59,840	53,974	+11%
Trade payables and other liabilities	3,365	2,159	+56%
Lease liabilities for right-of-use assets	2,974	2,918	+2%
TOTAL EQUITY AND LIABILITIES	85,095	77,158	+10%

* Data reflected according to restated comparatives in the latest financial statements.

Financial report Financial ratios

Q3 Q4 Q1

2022

Q2 Q3 Q4 Q1

2023

Cost-to-income ratio*

Q2 2021

Cost of interest-bearing liabilities

Equity ratio

Interest coverage ratio*

*Last 12 months figures. **Annualized. Data from older periods restated as per corrections made in 2022 audited annual report. Periods of COVID-19 restrictions in Latvia

Financial report

Capital structure

Capital structure 31.03.2023

Bond financing track record

DelfinGroup on Mintos

• Since 2016
• 90 thousand active investors
• Investors from 112 countries

* Latest bond emission registered in the amount of EUR 10 million and maturity in September 2024. The bond issue is a private placement, and the subscription period is open. As of 31 March 2023, EUR 8.5 million has been subscribed.

Financial report

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 3M 2023

Distribution of active clients by age on 31 March 2023*

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

*Active consumer lending segment clients

Dividends

Unique dividend distribution proposal in Baltics

Quarterly dividends

• At least 4 dividend payments per year
• Up to 50% from previous Q profit

Dividend yield of 6.4%*

Dividend period	Dividend payment date	EUR/share	EUR total	Payout ratio***
Q1 2023	Upon shareholders approval**	0.0177**	802 157**	49.73%**
Q4 2022	17.04.2023	0.0185	839 560	49.93%
Q3 2022	27.12.2022	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	29.12.2021	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

*Based on share price of EUR 1.5 on 31 March 2023 and including management's proposed dividends from Q1 2023 net profit. **Proposed dividends, distribution is subject to Shareholders meeting decision. ***Dividend amount paid from the net profit of the respective quarter.

Share performance

Share price, €

31.03.2023	DelfinGroup	Financial industry*
Capitalization m €	68.0	-
EPS TTM €	0.137	-
P/E	10.9	10.1
ROE	34.9%	24.2%

Share dynamics compared to indexes

DGR1R – DelfinGroup OMX_Baltic_Benchmark_GI OMX Riga_GI

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Company highlights

Business performance

Appendix

Consolidated income statement Financial report

BALANCE SHEET, EUR'000			2020*		2021 2022								2023
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
Total revenue	5,877	5,028	5,605	6,782	5,890	5,765	6,335	7,199	7,586	8,440	9,432	10,318	11,082
Cost of sales	-1072	-794	-810	-903	-620	-862	-721	-955	-780	-1,080	-1,179	-1,164	-1,443
Credit loss expense	-674	-391	-255	-775	-735	-595	-827	-658	-1,410	-1,308	-1,584	-1,859	-2,145
Interest expenses and similar expenses	-823	-887	-808	-1,115	-1,011	-852	-918	-1,046	-689	-958	-1,390	-1,632	-1,792
Gross profit	3,308	2,956	3,733	3,989	3,524	3,457	3,868	4,541	4,707	5,094	5,279	5,662	5,702
Selling expenses	-1,342	-1,155	-1,247	-1,703	-1,326	-1,442	-1,524	-1,832	-1,757	-1,686	-1,939	-2,054	-2,062
Administrative expenses	-857	-776	-865	-766	-945	-1,054	-1,019	-1,200	-1,280	-1,353	-1,512	-1,692	-1,766
Other operating income	4	25	16	28	16	11	29	29	24	22	21	37	15
Other operating expenses	-49	-48	-48	-44	-142	154	-127	-20	-115	-117	-24	-58	-64
Profit before tax	1,064	1,002	1,588	1,504	1,128	1,125	1,227	1,517	1,579	1,960	1,825	1,894	1,825
Income tax expense	-26	-7	-462	-259	-324	-299	-201	-155	-188	-742	-154	-212	-212
Net profit	1,038	995	1,126	1245	804	826	1,026	1,362	1,391	1,218	1,671	1,681	1,613
EBITDA	2,399	2,155	2,400	2,922	2,399	2,241	2,400	2,922	2,559	3,210	3,518	3,825	3,923

* Data reflected according to restated comparatives in the latest financial statements.

Consolidated balance sheet Financial report

BALANCE SHEET, EUR'000			2020*		2021 2022							2023
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
Fixed and intangible assets	748	859	927	1,038	864	818	789	1,201	1,301	1,351	1,387	1,470	1,595
Right-of-use assets	1,950	3,056	2,927	3,194	3,281	3,145	3,013	2,973	2,915	2,773	2,783	2,636	2,698
Loans to related parties	1,376	1,381	376	474	445	-	-	-	-	-	-	-	-
Net loan portfolio	33,025	32,840	34,644	35,661	32,937	33,859	38,812	43,755	47,967	54,515	60,508	67,518	73,453
Inventory and scrap	692	602	941	852	976	938	1,167	1,255	1,240	1,566	1,844	2,290	3,909
Other assets	503	536	365	655	495	331	746	520	541	364	1,333	875	1,042
Cash	2,037	1,958	2,434	4,592	1,907	594	2,541	2,460	1,704	2,314	4,010	2,369	2,398
TOTAL ASSETS	40,331	41,233	42,615	46,465	40,905	39,688	47,069	52,163	55,667	62,883	71,866	77,158	85,095
EQUITY	9,405	10,401	9,513	9,758	8,639	8,108	8,696	17,476	17,989	16,003	17,067	18,106	18,915
Share capital and reserves	1,500	1,500	4,000	4,000	4,000	4,000	4,000	4,532	4,532	4,532	4,532	4,532	4,532
Share premium	-	-	-	-	-	-	-	6,891	6,891	6,891	6,891	6,981	6,891
Other capital reserves												93	128
Retained earnings	7,905	8,901	5,513	5,758	4,639	4,108	4,696	6,053	6,566	4,580	5,644	6,590	7,364
LIABILITIES	30,926	30,832	33,102	36,707	32,266	31,580	38,373	34,687	37,678	46,881	54,799	59,052	66,180
Interest-bearing debt	27,316	25,586	27,575	31,151	26,894	26,360	33,290	29,412	31,644	40,477	49,704	53,974	59,840
Trade payables and other liabilities	1,596	2,047	2,418	2,120	1,798	1,768	1,751	1,970	2,788	3,307	1,999	2,159	3,365
Lease liabilities for right-of use assets	2,014	3,199	3,109	3,436	3,574	3,452	3,332	3,305	3,246	3,096	3,097	2,918	2,974
TOTAL EQUITY AND LIABILITIES	40,331	41,233	42,615	46,465	40,905	39,688	47,069	52,163	55,667	62,883	71,866	77,158	85,095

* Data reflected according to restated comparatives in the latest financial statements.

Sustainability DelfinGroup ESG report for 2021/2022 available here.

Promotion of circular economy

• Prolonged life-cycle of consumer goods.
• More than 160k pre-owned items sold yearly.

Inclusive society

• The most geographically available financial institution in Latvia.
• Serving the underserved customer segments.
• Charitable activities towards children and seniors.
• Inclusive workplace.

Sustainable corporate governance

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

Relevant UN Sustainable Development Goals:

Financial report

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-incomeRatio

((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

Dividend yield

Dividends per share paid over the last 12 months / price per share. If additional dividend payment is proposed by the company's Management Board but not yet paid, it is included in the calculation, and the last 12 months are calculated from the proposed dividend payment date.

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