Delfin Group

Investor Presentation • Apr 27, 2020

COMPANY PRESENTATION 2019

April, 2020

Until 03/02/2020:

DISCLAIMER

• This presentation is of selective nature and is made to provide an overview of the Company's (SIA 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 as well as the full prospectus describing a particular bonds issue.

DEFINITIONS FOR ALTERNATIVE PERFORMANCE MEASURES*

EBITDA

Earnings before interest, taxes, depreciation and amortization calculated as Net Income + Interest + Taxes + Depreciation + 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.

NET Profit Margin

How much net profit is generated as a percentage of revenue, calculated as Net Profit / Revenue. Used as an indicator of a company's financial health.

Net Debt

How well a company can pay all of its debts if they were due immediately calculated as Short-term Debt + Long-term Debt - Cash and Cash Equivalents. Used as a liquidity measure to assess if a company will need additional funding.

Interest-Bearing Debt

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

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.

KEY TO SUCESS

SMART POSITIONING

PROACTIVITY

Our vision is to always strive for the highest recognition.

Consumer loans Pawnbroking services Money transfer

Our mission is to create and provide innovative and custom finance solutions to our clients.

WE SERVE PEOPLE

WE PROVIDE

REPRESENTED BANDS

WE VALUE

WHO WE ARE

Values and ambitions have driven us to a decade of success.

JOURNEY TO EXCELLENCE

First pawn shop opened

Rebranding of

2010

50 branches opened in less than a year

Alternative Financial Services Association of Latvia was established

2011

Consumer lending launched

2013

Secured bonds issued and listed on Nasdaq Riga stock exchange

2015	2016	2017	2018	2019
Started money transfer with Western Union Rebranding of Banknote	Joined global loan marketplace Mintos	ISO certification Online Lending launched through new Banknote website	Launch of a new online lending brand VIZIA	corporate identity
Acquisition of Riga City Pawnshop		Received Customer Service Award for excellence in providing of financial services

SHAREHOLDER STRUCTURE

TOTAL PAID IN CAPITAL	EUR 1 500 000	100.00
Management	EUR 52 500	3.50
SIA EC Finance	EUR 319 800	21.32
SIA AE Consulting	EUR 150 000	10.00
SIA Lombards24.lv	EUR 977 700	65.18
SHAREHOLDERS	SHARES	%

Agris Evertovskis exercises control over SIA DelfinGroup as the beneficiary of parent companies SIA Lombards24.lv, SIA EC finance, and SIA AE Consulting.

96.5% of shares are controlled by the co-founder Agris Evertovskis.

MANAGEMENT BOARD

AGRIS EVERTOVSKIS Chairman of the Board

(co-founded company in 2009)

Previous experience in leading several commercial real estate development projects and companies (2006-2009).

DIDZIS ADMIDINS CEO (joined company in 2010)

KRISTAPS BERGMANIS

CFO

(joined company in 2012)

Previous experience as Member of the Board and Chief Financial Officer at Vision Express Baltija (2005-2012); Business Controller at Rimi Latvija (2003-2005).

IVARS LAMBERTS COO (joined company in 2014)

Experienced, professional and ambitious management board represents a set of diverse and mutually complementing competencies.

Agris Evertovskis, Chairman of the Board, Co-Founder;

BSc in Economics and Business Administration from the Stockholm School of Economics in Riga;

Kristaps Bergmanis, Member of the Board, Chief Financial Officer;

Bachelor's degree in Economics and Business Administration from the Stockholm School of Economics in Riga; ACCA candidate (passed 12 of 14 examinations);

Didzis Ādmīdiņš, Member of the Board, Chief Executive Officer;

Master's degree in Economics and Business Administration from the Riga Technical University;

Previous experience as Chief Operating Officer at several real estate companies (2008-2010); Retail credit specialist at Swedbank (2007- 2008).

Previous experience in leading global loyalty program Lyoness Latvia (2012-2015); Member of board at Lafiko.lv payday lender (2010-2012), Deputy director at Riga State Technical College (2009-2010).

Ivars Lamberts, Member of the Board, Chief Operational Officer, Head of Pawn Lending;

Master's degree in Economics and bachelor's degree in Finance Management from BA School of Business and Finance;

REQUIREMENTS AND RESTRICTIONS VALUE

Minimum capital requirement EUR 300 000

Initial licensing fee Annual licensing fee

	APPLIES TO CONSUMER LOANS	APPLIES TO PAWN LOANS
EUR 250 000 EUR 55 000
0.07%/day (~42% effective annual rate)

Restriction for advertising on state financed radio and television channels

Legal income check

AML and sanction list check

Cap on loan costs

TRUSTWORTHY AND STATE REGULATED BUSINESS

Alternative Financial Services Association of Latvia

Latvian Chamber of Commerce and Industry

State Revenue Service Consumer Rights Protection Centre

Founding member since 2013

Didzis Admidins is a member of the Supervisory Board

Member since 2015 DelfinGroup is the only non-bank lender included in the Gold level of the State Revenue Service for In-Depth Cooperation Programme (qualified on March 2019).

Non-bank lending business is monitored by Consumer Rights Protection Centre

ACTIVE AND SOCIALLY RESPONSIBLE PARTNER

NEED-DRIVEN BUSINESS

* Source: Latvian Financial Sector Development Plan 2017-2019.

Alternative financial services providers have significant development opportunities in Latvia.

Latvia's strategic goal for 2017-2019 was to activate lending. The goal was not fully achieved and is expected to stay in force until new development plan is published for a period starting from 2021.

Alternative financial services providers ensure the accessibility of funding for specific people groups and fill-in the gap in regions where traditional market players leave.

HOUSEHOLDS VALUE ALTERNATIVE FINANCIAL SERVICES AS THEY ARE:

• convenient;
• discreet;
• fast;
• reasonable.

ACCESS CHANNELS

BRAND CREATED	2017	2018
ACCESS CHANNELS	ONLINE OFFLINE	ONLINE
BRAND FOCUSS	Conservative, reliable.	Dynamic and flexible.
ADVERTISING CHANNELS	•Online; • Search marketing; • Commercial TV and radio; •Offline via branch network.	•Online; • Search marketing; •Affiliate networks; • E-mail marketing.

* Calculated against total issuance in 2019.

BRAND HIGHLIGHTS

2 strong brands cover secured and unsecured lending.

Banknote (pawn loans) 38%*

Banknote (unsecured) 50%*

Vizia (unsecured)

12%*

ESSENTIAL SERVICES

Consumer loans; Pawn loans; Pawnshop services; Online shop; International money transfer Western Union.

TARGET AUDIENCE

Customers with low/stable income; People who need to cover unplanned expenses; Seniors (an underserved market segment).

BRAND VISION

High brand awareness all across the country;

Common branch concept;

The largest branch network among financial service providers.

LEADING PLAYER

No. 1 player in pawn loan segment in Latvia.

VIZIA provides online financial services only.

ESSENTIAL SERVICES

Consumer loans.

TARGET AUDIENCE

Customers 25-50 years old with stable income; People who need to finance medium sized purchases; Tech savvy millennials.

BRAND VISION

A modern financial services provider specializing in simple and fast consumer loans for both small purchases and large planned expenses;

Transparent and agile financial services built for advanced online users.

devuma summa	1200€			<>
		50		1000		2000
neša ksājums	4 mēneši 325.48 €	6 mēneši 225.48 €	12 mēneši 125.48 €	18 mēneši 92.15 €	24 meneši 75.47 €	36 mēneši 58.81 €	60 mê 45.4
devuma ormacija	Pirmā maksājuma datums 0			15 11/01/2020		Uzzināt vairāk
	Aizdevuma kopējā summa			1200.00 €		Standartinformācija Līguma notelkumi Līguma atmaksas grafiks	1 >
		Aizdevuma ikmēneša maksājums 9		75.47 €

CLIENT SERVICE

In 2019, online brand Vizia has Google Review rating of 4.9/5 from clients for exceptional service.

INVEST IN PEOPLE TO ENHANCE EXCELLENCE

Employee competence development program over decade has been continuously improved.

Each employee in client service area has fullprofile skills to deliver service excellence and financial expertise.

DelfinGroup objectives and values are shared across all organization and management levels.

BROAD AND DEVELOPED BRANCH NETWORK

Branches are located in main cities and most populated areas of Latvia providing access to broad customer base.

QUALITY CONTROL ADVANCES SERVICE

There are continuous skill based follow-ups for branch employees.

Distant and face-to-face customer service monitoring smoothens even the tiniest inconsistencies of service standards.

Management processes are certified according to ISO 9001:2015 and ISO 50001:2015 standards.

VENTSPILS - 2

LIEPĀJA - 5

SERVICE NETWORK

87 branches 38 towns

Presence in every single populated area of Latvia having at least 4 000 inhabitants.

Shopping experience and item placement are similar to those of consumer electronics stores. This attracts customers

• interested in pawn loans;
• looking for inexpensive pre-owned (used) goods.

Banknote pawn shop interior and storefront design differs significantly from competitors.

All locations are welcoming with focus on

• transparency,
• friendliness, and
• superb client service.

SERVICE AREA

PAWN vs CONSUMER LOANS

Comparatively small pawn loan portfolio generates 36% of total group's income.

*Source: Consumer Rights Protection Centre.

0

10 20

30 40

50 60

The market share of issued loans is growing every year.

PAWN LOAN PORTFOLIO, DELFINGROUP VS INDUSTRY*

MARKET OVERVIEW

In 2019 H1, 41% of all pawn loans issued in Latvia were issued by DelfinGroup.

PAWN LOANS

LOAN TO VALUE	65%, average issued loan 64 EUR in 2019
---------------	-----------------------------------------

• TERMS up to 31 days (single payment loans);
  • 2 24 months (installment loans).

INTEREST RATE PER MONTH 5% - 28%

APPLICATION AND ISSUANCE PROCESS

Only in Banknote branches

MOST COMMON PAWN ITEMS Jewellery, mobile, audio, video and photo devices, office equipment and hardware, antique items, etc.

NET LOAN PORTFOLIO INTEREST INCOME mEUR mEUR

• SELLING OF INVENTORY within 3 months;
  • 43% mark-up on goods.

PAWN LOANS IN SPOTLIGHT

PAWN LOANS

PAWN LOANS ISSUED IN 2019

STABLE GROWTH PATTERN FOR PORTFOLIO AND INTEREST INCOME

0

100

200

300

* Loan portfolio data based on DelfinGroup net consumer loan portfolio excl. accrued interest.

** Based on consumer loan portfolio as at the end of 2019 H1.

MARKET OVERVIEW

DelfinGroup* grows faster than the industry, having ~6%** market share.

CONSUMER LOANS

CONSUMER LOAN PORTFOLIO, DELFINGROUP VS. INDUSTRY*

AMOUNT OF CONSUMER LOANS ISSUED, DELFINGROUP VS. INDUSTRY*

*Source: Consumer Rights Protection Centre.

mEUR

mEUR

CONSUMER LOANS

CONSUMER LOANS ISSUED IN 2019

64%

CONSISTENT TENDENCY OF CONSUMER LOANS PORTFOLIO AND INTEREST INCOME

NET LOAN PORTFOLIO

incl. accr. %, mEUR

INTEREST INCOME

mEUR

CONSUMER LOANS IN SPOTLIGHT LOAN SIZE • EUR 50 – 5000;

LOAN SIZE	• EUR 50 – 5000; • weighted average loan size – 672 EUR in 2019; • Banknote and VIZIA offers differ.
TERMS	instalment loans 2 – 60 months
LENDING RATE PER ANNUM	33.4% - 43.7% (excluding other service fees)
APPLICATION AND ISSUANCE PROCESS	In branches and online
ACTIVE CLIENTS	18 000 (on average in 2019)
PAYMENT DISCIPLINE	Only 5.6% of loans in active portfolio having more than 90 days overdue payments.

PROFITABILITY BASED ON THOROUGH PROCESSES

2019 was challenging, yet fruitful.

NEW TECHNOLOGIES AND PROCESSES

Online services increases customer base which values high-quality financial services.

Customer-oriented loan evaluation, issuance and monitoring processes contributes to profitability.

Operations are data driven with extensive IT development.

Process ownership, key performance indicators and reporting system helps to track every aspect of business.

Core processes undergo constant efficiency scrutiny.

SPOT-ON MARKETING STRATEGY

Customers are approached with resonating messages through targeted segmentation and diverse pricing policy.

Brand recognition is boosted by extensive branch network which is used as instrumental outdoor advertising.

Broad range of sales channels contributes to efficient marketing.

Marketing focus is devoted to building long term customer loyalty.

0

2

4

6

8

10

12

* Calculated as EBITDA / (Interest income + Gross profit from sale of foreclosed items)

-50% -40% -30%

-20%

-10% 0%

10%

20% 30%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

EBITDA, mEUR

* Calculated as NET PROFIT / (Interest income + Revenue from sale of foreclosed items).

NET PROFIT, mEUR

SOLID FINANCIAL PERFORMANCE

2019 has been successful in terms of maintaining high profitability after the new interest rate cap.

FINANCIAL RATIOS

Sustainable financial performance.

Business operations has generated substantial EBITDA.

KEY FINANCIALS: INCOME STATEMENT

INCOME STATEMENT, EUR'000	2017A	2018A	2019A
Interest and similar income	13 863	14 664	16 382
Gross profit from sale of goods	1 414	1 528	1 800
Cession result	(1 683)	(494)	(1 499)
GROSS PROFIT	13 594	15 697	16 683
Selling expense	(5 458)	(5 681)	(4 989)
Administrative expense	(2 290)	(2 771)	(3 487)
Net other income / (expense)	(162)	(71)	(105)
EBITDA	5 684	7 174	8 102
Depreciation	(209)	(250)	(986)
Interest and similar expense	(1 823)	(2 298)	(2 853)
Taxes	(700)	(79)	(350)
NET PROFIT before dividends	2 952	4 546	3 913
Dividends paid	(996)	(490)	-
NET PROFIT	1 956	4 056	3 913

KEY FINANCIALS: BALANCE SHEET

Continuous increase in the loan portfolio and total assets.

BALANCE SHEET, EUR'000	2017A	2018A	2019A
Fixed and intangible assets	601	603	2 740
Loans to related parties	1 303	1 277	1 308
Net loan portfolio	15 844	20 151	31 547
Inventory and scrap	683	848	1 155
Other assets	668	298	384
Cash	2 220	3 489	1 136
TOTAL ASSETS	21 317	26 666	38 270
Share capital and reserves	1 500	1 500	1 500
Retained earnings	233	398	2 954
Profit/loss for the current year	1 957	4 056	3 913
EQUITY	3 689	5 954	8 367
Interest-bearing debt	16 346	19 555	26 541
Trade payables and other liabilities	1 282	1 156	3 362
LIABILITIES	17 628	20 711	29 903
TOTAL EQUITY AND LIABILITIES	21 317	26 666	38 270

KEY FINANCIALS: CASH FLOW

Growth financed from operations and attracted financing.

CASH FLOW STATEMENT, EUR'000	2017A	2018A	2019A
EBITDA	5 685	7 174	8 102
Taxes	(252)	(368)	(79)
Interest payments	(1 823)	(2 277)	(2 853)
Cessation result	1 683	494	1 499
Change in Consumer loans issued	(6 391)	(4 689)	(13 095)
Acquisition of right-of-use assets	-	-	(2 738)
Other adjustments	155	266	2 585
Cash flow from operations	(943)	601	(6 579)
Acquisition of fixed assets and intangibles	(168)	(223)	(430)
Loans issued/repaid to other	133	26	(31)
Other adjustments	32	19	64
Cash flow from investing	(3)	(177)	(397)
Loans received and bonds issued (net)	14 063	8 560	14 280
Redemption/purchase of bonds	(2 851)	(1 106)	(1 750)
Loans repaid	(7 184)	(4 316)	(7 131)
Dividends (incl. extraordinary dividends)	(2 070)	(2 230)	(1 500)
Lease liabilities for right-of-use assets	-	-	828
Other adjustments	(72)	(62)	(104)
Cash flow from financing	1 886	846	4 623
TOTAL CASH FLOW	940	1 269	(2 353)

* As at the end of the period.

** Part of unified securitization structure with ZAB Eversheds Sutherland Bitāns acting as the collateral agent. Collateral with total value 40.5m EUR registered on December 2019.

FINANCING STRUCTURE

Diversified financing structure with established investor demand.

Transparent and open investor relations according to the best standards of corporate governance including quarterly reporting.

WEBSITES FOR INVESTORS:

WWW.DELFINGROUP.LV;

WWW.NASDAQBALTIC.COM – stock exchange;

WWW.MINTOS.COM – pear-to-pear platform.

INTEREST-BEARING DEBT	2018, EUR'000*	2019, EUR'000*	INTEREST RATE, %	MATURITY
Secured bonds**	-	7 850	14% - 15%	2020/12 -2022/11
Unsecured bonds**	7 907	-	14% - 15%	2020/12 -2021/10
Peer-to-peer lending platform Mintos**	11 492	18 044	10.62% - 11.97% (effective rate)	According to issued loans
Leases	148	102	EURIBOR+ 3.5%	Up to 3 years
Private loans	-	569	14.0%	Up to 3 years
Accrued interest and bonds commissions	8	-25
TOTAL	19 555	26 541

Experienced and recognized bond Issuer.

CAPITAL MARKET HISTORY

LV0000801280 14% Maturity: 25/11/2018

Listed on Nasdaq Baltic Regulated Bond market

LV0000801280 14%	LV0000801322 15% Sinking fund until 25/12/2020	LV0000802213 14% Maturity: 25/10/2021	LV0000802379 14% Maturity: 25/11/2022
EUR 5 000 000	EUR 3 500 000	EUR 5 000 000	EUR 5 000 000
secured	secured	secured	secured
Listed on Nasdaq Baltic Regulated Bond market	Listed on Nasdaq Baltic Regulated Bond market	Listed on Nasdaq Baltic First North Alternative market	Will be listed on Nasdaq Baltic First North Alternative market
Repaid	Remaining sinking fund EUR 1 312 500: 25/06/2020 – EUR 437 500 25/09/2020 – EUR 437 500 25/12/2020 – EUR 437 500	Bullet @ 25/10/2021	Bullet @ 25/11/2022

FINANCIAL FORECAST

In March 2020, the Republic of Latvia and many other countries have announced coronavirus related restrictions that substantially decrease the economic development of the country and of the world.

To ensure the Company's operational stability in unclear economic environment, the Company's management has taken necessary actions including:

• decrease of operational costs;
• decrease of lending activity and focus on long-term clients with good credit history;
• measures for maintaining high liquidity.

It is unpredictable how the situation would develop in the future, and therefore uncertainty regarding economic development remains. Forecast will be reviewed as more certainty regarding economic outlook will be available.

EBITDA, mEUR (as published on 08/2019 via Nasdaq)

COVID - 19 impact on forecast

SIA DelfinGroup Skanstes iela 50A

kristaps.bergmanis@delfingroup.lv

+371 66 15 50 06

www.delfingroup.lv