Delfin Group

Quarterly Report • May 12, 2023

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AS DelfinGroup Unaudited consolidated interim report

AS "DelfinGroup" Unaudited consolidated interim report January – March 2023

Translation from Latvian

January – March 2023 (translation from Latvian)

Table of Contents

AS DelfinGroup Unaudited consolidated interim report

January – March 2023 (translation from Latvian)

Information on the Company and subsidiaries	3 – 5
Statement of management's responsibility	6
Management report	7 - 11
Interim consolidated Statement of profit or loss	12
Interim consolidated Balance sheet	13 – 14
Interim consolidated Statement of changes in equity	15
Interim consolidated Statement of cash flows	16
Notes	17 – 24

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AS DelfinGroup Unaudited consolidated interim report January – March 2023 (translation from Latvian)

Information on the Company and Subsidiaries

Name of the Company	DelfinGroup
Legal status of the Company	Joint stock company (till 19.01.2021, Limited liability company)
Number, place and date of registration	40103252854 Commercial Registry Riga, 12 October 2009
Operations as classified by NACE classification code system	NACE2 64.92 Other credit granting NACE2 47.91 Retail sale via mail order houses or via Internet NACE2 47.79 Retail sale of second-hand goods in stores NACE 47.77 Retail sale of watches and jewellery in specialised stores
Address	50A Skanstes Street, Riga, LV-1013 Latvia
Names and addresses of shareholders	SIA L24 Finance (55.54%), 12 Jūras Street, Liepaja, Latvia
	SIA AE Consulting (8.75%), 50A Skanstes Street, Riga, Latvia
	SIA EC finance (18.28%), 50A Skanstes Street, Riga, Latvia
	Other (17.43%)
Ultimate parent company	SIA L24 Finance Reg. No. 40103718685 12 Jūras Street, Liepaja, Latvia
Names and positions of Board members	Didzis Ādmīdiņš – Chairman of the Board (from 19.01.2021)
	Aldis Umblejs – Member of the Board (from 15.12.2021)
	Sanita Pudnika – Member of the Board (from 01.03.2022)
	Ivars Lamberts – Member of the Board (from 11.01.2018 till 28.02.2022)

Names and positions of Supervisory Board members	Agris Evertovskis – Chairperson of the Supervisory Board (from 13.04.2021)
	Gatis Kokins – Deputy Chairman of the Supervisory Board (from 13.04.2021)
	Mārtiņš Bičevskis – Member of the Supervisory Board (from 13.04.2021)
	Jānis Pizičs – Member of the Supervisory Board (from 13.04.2021)
	Edgars Voļskis – Member of the Supervisory Board (from 13.04.2021)
Reporting period	1 January 2023 – 31 March 2023

AS DelfinGroup Unaudited consolidated interim report January – March 2023 (translation from Latvian)

Information on the Subsidiaries

Subsidiary	SIA ViziaFinance (parent company interest in subsidiary – 100%)
Date of acquisition of the subsidiary	23.02.2015
Number, place and date of registration of the subsidiary	40003040217; Riga, 06 December 1991
Address of the subsidiary	50A Skanstes Street, Riga, Latvia
Operations as classified by NACE classification code system of the subsidiary	64.92 Other financing services

AS DelfinGroup Unaudited consolidated interim report January – March 2023 (translation from Latvian)

Statement of management`s responsibility

The management of AS DelfinGroup (hereinafter – the Company) is responsible for the preparation of the Consolidated interim report January – March 2023 (hereinafter – interim report) of the Company and its subsidiaries (hereinafter – the Group or DelfinGroup).

The interim report set out on pages 12 to 24 are prepared in accordance with the source documents and present the financial position of the Group as of 31 December 2023 and the results of its operations, changes in shareholders' equity and cash flows for the three-month period ended 31 March 2023. The management report set out on pages 7 to 11 presents fairly the financial results of the reporting period and future prospects of the Group.

The interim report are prepared on a going concern basis in accordance with International Financial Reporting Standards as adopted by the European Union. Appropriate accounting policies have been applied on a consistent basis. Prudent and reasonable judgments and estimates have been made by the Management in the preparation of the financial statements.

The Management of AS DelfinGroup is responsible for the maintenance of proper accounting records, the safeguarding of the Group's assets and the prevention and detection of fraud and other irregularities in the Group. The Management is also responsible for compliance with requirements of legal acts of the countries where Group companies and the Parent company operate.

Didzis Ādmīdiņš Chairman of the Board Aldis Umblejs Board Member Sanita Pudnika Board Member

Management report

In the first three months of 2023, the Latvian financial services group AS DelfinGroup reached 11.1 million euros in revenue, which is 46% more compared to the corresponding period of 2022. The Group showed stable EBITDA growth, which increased by 53% and reached 3.9 million euros. In the first quarter of 2023, DelfinGroup continued to deliver increasing profitability, with profit before taxes running EUR 1.8 million, which is a 16% increase compared to the first quarter of last year, while the Group's net profit increased by 16%, reaching EUR 1.6 million.

In the 1st quarter of 2023, demand for DelfinGroup consumer and pawn loans remained stable, resulting in record quarterly loan issuance figures. In the first three months of 2023, the Group issued new loans for 24 million euros, 59% more than in the corresponding period of the previous year. Among them, consumer loans were issued in the amount of 18.3 million euros, or 59% more than in the corresponding period of last year. Meanwhile, in the pawn lending segment, issuance has increased by 58%, reaching 5.7 million euros. As a result of the successful issuance of loans, the Group's net loan portfolio has reached the historically highest level – 73.5 million euros.

According to the Group's strategy, one of the main goals is promoting the circular economy, which is supported by the trade of pre-owned and slightly pre-owned goods, which extends the life cycle of items and reduces CO2 emissions during the production of new goods. In this segment as well, DelfinGroup continued its stable development, increasing both the number of sold goods that have been given a second life and the revenues of the segment. In the first quarter of 2023, the Group sold pre-owned and new goods for 3.3 million euros, which is a 43% increase compared to the corresponding period of the previous year.

Based on the current economic situation, business results, and development trends, DelfinGroup clarified the goals for 2023 and 2024 and set forecasts for 2025. It is planned that the net loan portfolio of the Group will reach 100 million euros in 2025. Also, by the end of 2025, it is planned to reach an EBITDA of 26 million euros and to double the profit before taxes to 15 million euros. According to DelfinGroup dividend policy, the company will continue to maintain an equity ratio of at least 20% to total assets, which is a prerequisite for a well-balanced capital structure. In addition, as before, the company plans to make quarterly dividend payments to shareholders of up to 50% of the net profit.

On 29 March 2023, an extraordinary meeting of shareholders of the Company took place, where the AS DelfinGroup unaudited interim condensed consolidated financial statements for the twelve-month period ended 31 December 2022 were approved. Also, the payment of dividends from the 4th quarter of 2022 profit of 838 thousand euros was approved in the amount of 0.0185 euros per share. The quarterly dividend payment to shareholders took place on 17 April 2023.

As part of DelfinGroup long-term motivation program, a staff option program was launched to promote the employees' sense of belonging to the company. 450 thousand company shares will be issued as part of the program. All employees of the Group who have worked in the Group for at least 12 months can participate in the staff option program, which will allow employees to earn along with the company's development in addition to their salary.

In the 1st quarter of 2023, DelfinGroup signed an agreement with BA School of Business and Finance (BASBF) and Riga Technical University (RTU) on cooperation in the fields of studies and research. As a result, the fintech company and these higher education institutions have arranged to work together as part of the Financial Management Information Systems joint vocational bachelor study programme taught by BASBF and RTU. In close cooperation with industry professionals, the study programme prepares financial system software developers. It thus provides the financial and fintech industries with the highly skilled specialists that the job market demands. The agreement aims to create broader opportunities for cooperation in scientific, academic, and administrative work for DelfinGroup employees and the students and teaching staff of the Financial Management Information Systems vocational bachelor study programme. Furthermore, it will result in the students gaining the ability to consolidate their knowledge in practice and get advice from industry professionals throughout their studies.

Management report (CONTINUED)

By implementing the business strategy and all planned activities, the following financial results of the Group were achieved in the first three months of 2023 (profit statement items are compared to the same period of the previous year, balance sheet items are compared to the data as at 31.12.2022):

Position	EUR, million	Change, %
Net loan portfolio	73.5	+8.8
Assets	85.1	+10.3
Revenue	11.1	+46.1
EBITDA	3.9	+53.3
Profit before taxes	1.8	+15.6
Net profit	1.6	+15.9

And following the Group's key financial figures for the last 5 financial quarters:

Position	2022 Q1	2022 Q2	2022 Q3	2022 Q4	2023 Q1
Revenue, EUR million	7.6	8.4	9.4	10.3	11.1
EBITDA, EUR million	2.6	3.2	3.5	3.8	3.9
EBITDA margin, %	34%	38%	37%	37%	35%
EBIT, EUR million	2.3	2.9	3.2	3.5	3.6
EBIT margin, %	30%	35%	34%	34%	33%
Profit before taxes, EUR million	1.6	2.0	1.8	1.9	1.8
Net profit, EUR million	1.4	1.2	1.7	1.7	1.6
Net profit margin, %	18%	14%	18%	16%	15%
ROE (annualised), %	31%	29%	39%	38%	35%
Current ratio	1.4	1.3	1.3	0.7	0.7

In some cases, quantitative values have been rounded up to the nearest decimal place or whole number to avoid an excessive level of detail. As a result, certain values may not necessarily add up to the respective totals due to the effects of the approximation. 2022 Q1 are corrected by restatements in Note 1. 2022 Q4 are corrected by restatements in Note 1 of Group's annual consolidated financial statements as at 31 December 2022.

EBITDA calculation, EUR million:

	2023 Q1	2022 Q1
Item
Profit before tax	1.8	1.6
Interest expenses and similar expenses	1.8	0.7
Depreciation of fixed assets and amortisation	0.3	0.3
EBITDA, EUR million	3.9	2.6

Management report (CONTINUED)

As for compliance with the Issue Terms of notes issue ISIN LV0000850048, ISIN LV0000802536 and ISIN LV0000850055 the financial covenant computation is as follows:

Covenant	Value as of 31.03.2023	Compliance
to maintain a Capitalization Ratio at least 25%	26%	yes
to maintain consolidated Interest Coverage Ratio of at least 1.25 times, calculated on the trailing 12 month basis	2.5	yes
to maintain the Net Loan portfolio, plus Cash, net value of outstanding Mintos Debt Security and secured notes balance, at least 1.2 times the outstanding principal amount of all unsecured interest-bearing debt on a consolidated basis.	1.7	yes

Principles of alternative performance measures

Dividend yield = dividends paid per share / share price at the end of the period * 100.

Net loan portfolio = non-current loans and receivables + current loans and receivables.

Revenue = net sales + interest income and similar income.

EBITDA margin = (profit before tax + interest expenses and similar expenses + depreciation of property, plant and equipment and amortization of intangible assets + depreciation of right-of-use assets) / (net sales + interest income and similar income) * 100.

EBIT margin = (profit before tax + interest expenses and similar expenses) / (net sales + interest income and similar income) * 100.

Net profit margin = net profit / (net sales + interest income and similar income) * 100.

ROE = net profit / ((total equity as at start of the period + total equity as at period end) / 2) * 100.

Current ratio = total current assets / total short-term liabilities * 100.

Capitalization ratio = total equity / (non-current loans and receivables + current loans and receivables) * 100.

Interest coverage ratio = (profit before tax + interest expenses and similar expenses) / interest expenses and similar expenses

Equity ratio = total equity / total assets * 100.

Cost to income ratio = (selling expenses + administrative expenses + other operating expenses – debt sale results) / (net sales – cost of sales + interest income and similar income – interest expenses and similar expenses + other operating income) * 100.

Investor information

DelfinGroup shares are listed on the Baltic Main List on the Nasdaq Riga stock exchange with the ISIN code LV0000101806. As of 31 March 2023, a total of 45,319,594 shares had been issued. The share price was EUR 1.5, making a total market capitalization of EUR 68 million. During the reporting period, the trading of DelfinGroup shares reached 803 thousand euros. During the first three months of 2023, the share price increased by 1.21%. The lowest price at which the Company's shares were traded was 1.478 euros, and the highest was 1.55 euros.

Management report (CONTINUED)

Branches

As at 31 December 2022, the Group had 92 branches in 38 cities in Latvia (31.12.2022 - 91 branches in 38 cities).

Risk management

The Group is not exposed to foreign exchange rate risk because the basic transaction currency is the Euro. Majority of the funding of the Group consists of fixed coupon rate borrowings, so that the Group is not exposed to variable interest rate risk. Accurate application of the prudent strategies chosen has allowed the Group to successfully manage its financial risks, particularly the liquidity and credit risk. All Group transactions are performed in Latvia, the Group has no counterparties in Russia and Belarus thus the impact of the war in Ukraine and the associated sanctions has insignificant effect on the company's operations.

Distribution of the profit proposed by the Company

The Company's board recommends the distribution of Q1 2023 profit as dividends in accordance with the Company's dividend policy, which sets the target of up to 50% quarterly dividend pay out.

Didzis Ādmīdiņš Chairman of the Board Aldis Umblejs Board Member Sanita Pudnika Board Member

Interim consolidated Statement of profit or loss January – March 2023

		For 3 months ended 31 March
		2023	2022
			(restated,
			note 1)
	Notes	EUR	EUR
Net sales	(2)	2 302 806	1 245 761
Cost of sales		(1 443 337)	(779 723)
Interest income and similar income	(3)	8 779 121	6 340 294
Interest expenses and similar expenses	(4)	(1 791 960)	(688 911)
Credit loss expenses		(2 144 585)	(1 410 285)
Gross profit		5 702 045	4 707 136
Selling expenses	(5)	(2 062 572)	(1 757 066)
Administrative expenses	(6)	(1 764 851)	(1 279 404)
Other operating income		14 943	24 275
Other operating expenses		(64 249)	(115 917)
Profit before corporate income tax		1 825 316	1 579 024
Income tax expenses		(212 230)	(187 656)
Net profit		1 613 086	1 391 368
Basic earnings per share	(7)	0.036	0.031
Diluted earnings per share	(7)	0.036	0.031

Notes on pages from 17 to 24 are an integral part of these interim reports.

Didzis Ādmīdiņš Chairman of the Board Aldis Umblejs Board Member Sanita Pudnika Board Member

Interim consolidated Balance sheet as at 31 March 2023

		Group	Group
Assets		31 March 2023	31 December 2022
Non-current assets:	Notes	EUR	EUR
Intangible assets:
Patents, licences, trademarks and similar rights		17 429	26 906
Internally developed software		523 649	575 458
Other intangible assets		134 755	121 162
Goodwill		127 616	127 616
Advances for intangible assets		175 100	43 801
Total intangible assets:		978 549	894 943
Property, plant and equipment:			182 378
Land, buildings and structures Leasehold improvements		180 433 201 946	189 340
Right-of-use assets		2 697 743	2 636 223
Other fixtures and fittings, tools and equipment		233 683	203 192
Total property, plant and equipment		3 313 805	3 211 133
Non-current financial assets:
Loans and receivables	(8)	52 729 351	46 150 128
Total non-current financial assets:		52 729 351	46 150 128
Total non-current assets:		57 021 705	50 256 204
Current assets:
Inventories:
Finished goods and goods for sale		3 909 483	2 289 780
Total inventories:		3 909 483	2 289 780
Receivables: Loans and receivables
	(8)	20 723 690 633 317	21 367 679 574 646
Other debtors Deferred expenses		408 764	300 670
Total receivables:		21 765 771	22 242 995
Cash and cash equivalents		2 398 179	2 369 029
Total current assets:		28 073 433	26 901 804
Total assets		85 095 138	77 158 008

Notes on pages from 17 to 24 are an integral part of these interim reports.

Didzis Ādmīdiņš Chairman of the Board Aldis Umblejs Board Member Sanita Pudnika Board Member

Group Group Liabilities and equity 31 March 2023 31 December 2022 Equity: Notes EUR EUR Share capital 4 531 959 4 531 959 Share premium 6 890 958 6 890 958 Other capital reserves 128 059 93 058 Retained earnings (9) 7 364 435 6 589 761 Total equity: 18 915 411 18 105 736 Liabilities: Long-term liabilities: Bonds issued (10) 7 406 149 4 330 630 Other borrowings (11) 16 325 516 15 004 505 Lease liabilities for right-of-use assets 2 224 973 2 353 309 Total long-term liabilities: 25 956 638 21 688 444 Short-term liabilities: Bonds issued (10) 15 548 252 14 783 110 Other borrowings (11) 20 560 236 19 856 253 Lease liabilities for right-of-use assets 749 345 565 131 Trade payables 695 027 856 429 Taxes and social insurance 586 298 560 492 Unpaid dividends 838 412 - Accrued liabilities 1 245 519 742 413 Total short-term liabilities: 40 223 089 37 363 828 Total liabilities 66 179 727 59 052 272 Total liabilities and equity 85 095 138 77 158 008

Interim consolidated Balance sheet as at 31 March 2023

Notes on pages from 17 to 24 are an integral part of these interim reports.

Didzis Ādmīdiņš Chairman of the Board

Aldis Umblejs Board Member Sanita Pudnika Board Member

Interim consolidated Statement of changes in equity January - March 2023

	Share capital	Share premium	Other capital reserves	Retained earnings	Total
	EUR	EUR	EUR	EUR	EUR
As at 01 January 2022, as previously	4 531 959	6 890 958	-	5 954 404	17 377 321
Impact of correction of errors (Note 1)	-	-	-	98 661	98 661
Restated as at 01 January 2022	4 531 959	6 890 958	-	6 053 065	17 475 982
Profit for the reporting period (Note 1) Dividends paid	- -	- -	- -	1 391 368 (779 497)	1 391 368 (779 497)
As at 31 March 2022	4 531 959	6 890 958	-	6 664 936	18 087 853

As at 01 January 2023	4 531 959	6 890 958	93 058	6 589 761	18 105 736
Profit for the reporting period	-	-	-	1 613 086	1 613 086
Dividends paid	-	-	-	(838 412)	(838 412)
Share-based payments	-	-	35 001	-	35 001
As at 31 March 2023	4 531 959	6 890 958	128 059	7 364 435	18 915 411

Notes on pages from 17 to 24 are an integral part of these interim reports.

Didzis Ādmīdiņš Chairman of the Board

Aldis Umblejs Board Member Sanita Pudnika Board Member

Interim consolidated statement of cash flows January - March 2023

		For 3 months	For 3 months
		ended 31 March	ended 31 March
		2023	2022
	Notes	EUR	EUR
Cash flow from operating activities
Profit before corporate income tax		1 825 316	1 579 024
Adjustments for non-cash items:
a) depreciation and amortisation		118 151	103 344
b) depreciation of right-of-use assets		187 925	187 596
c) credit loss expenses		2 144 585	1 410 285
d) share-based payment expense		35 001	-
e) interest income and similar income	(3)	(8 779 121)	(6 340 294)
f) interest expenses and similar expenses	(4)	1 791 960	688 911
Profit before adjustments of working capital and short-term liabilities		(2 676 183)	(2 371 134)
Change in operating assets/liabilities:
a) (Increase) on loans and receivables and other debtors		(7 499 551)	(4 756 972)
b) (Increase)/ decrease on inventories		(1 619 703)	(883 541)
c) (Decrease)/ increase on trade payable and accrued liabilities		1 485 594	871 707
Gross cash flow from operating activities		(10 309 843)	(7 139 940)
Interest received		8 032 088	6 254 224
Interest paid		(2 223 687)	(946 388)
Corporate income tax payments		(1 296 108)	(979 191)
Net cash flow from operating activities		(5 797 550)	(2 811 295)
Cash flow from investing activities
Acquisition of property, plant and equipment		(87 022)	(44 984)
Acquisition of intangible assets		(155 887)	(158 204)
Net cash flow from investing activities		(242 909)	(203 188)
Cash flow from financing activities
Loans received		6 438 383	3 394 579
Loans repaid		(3 979 001)	(2 044 977)
Bonds issued		3 838 000	1 142 347
Redemption of bonds		-	(2 347)
Repayment of lease liabilities		(227 773)	(230 817)
Net cash flow from financing activities		6 069 609	2 258 785
Net cash flow of the reporting period		29 150	(755 698)
Cash and cash equivalents at the beginning of the reporting period		2 369 029	2 459 862
Cash and cash equivalents at the end of the reporting period		2 398 179	1 704 164

Notes on pages from 17 to 24 are an integral part of these interim reports.

Didzis Ādmīdiņš Chairman of the Board Aldis Umblejs Board Member Sanita Pudnika Board Member

(1) Accounting policies

Basis of preparation

These financial statements have been prepared based on the accounting policies and measurement principles as set out below.

The interim reports for the three-months ended 31 March 2023 have been prepared in accordance with IAS 34 Interim Financial Reporting. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. The Management considers that there are no material uncertainties that may cast significant doubt over this assumption. They have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and not less than 12 months from the end of the reporting period.

The interim reports do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements as at 31 December 2022.

These interim reports are prepared and disclosed on a consolidated basis. The following subsidiaries are included in the consolidation: SIA ViziaFinance (100%) for the period ended 31 March 2023.

Restatement in comparative figures due to correction of errors

• (a) The Management has identified a classification error on pawn loans while preparing Group's financial statements. The error relates to incorrect classification of collateral as Net sales. The error resulted in overstatement of the Group's Net sales by EUR 330 940, Cost of sales by EUR 225 709 in statement of profit or loss for the prior 3 months ended 31 March 2022 and understatement of Interest income and similar income by EUR 105 231 in statement of profit and loss for the prior 3 months ended 31 March 2022.
• (b) In these financial statements, the Group has improved ECL calculation model. The Group have included defaults from debt sale before payments are past due for more than 90 days in probability of default calculation. Model improvement resulted in an identified understatement of Credit loss expenses by EUR 247 327 in statement of profit or loss for the prior 3 months ended 31 March 2022.
• (c) The Management has reconsidered the judgment in respect of pawn loan accounting and come to conclusion that pawn loans do not meet solely payment of principal and interest (SPPI) requirements, thus prior period pawn loan measurement according to amortized cost were erroneous. The Group recognizes and subsequently measures pawn loans at fair value. There is no difference in comparative figures of Loans and receivables, and Interest income and similar income due to this error.
• (d) The Management has identified an error on interest revenue calculation on debt financial assets by applying effective interest rate method while preparing Group's financial statements. The error resulted in understatement of Interest income and similar income by EUR 225 026 in statement of profit and for the prior 3 months ended 31 March 2022. To comply with requirements of IFRS 9, the Group have recalculated interest income and similar income.
• (e) The Management has identified a classification error on accounting of e-shop sales while preparing Group's financial statements. The error relates to incorrect recognition of e-shop markup in net sales. The error resulted in understatement of the Group's Net sales by EUR 110 944, Cost of sales by EUR 110 944 in statement of profit or loss for the prior 3 months ended 31 March 2022.
• (f) In these financial statements, the Group have changed the presentation of losses from debt sales. In statement of profit or loss for the prior 3 months ended 31 March 2022 losses from debt sales was presented under Other operating expenses. In these financial statements, for better presentation of financial information, losses from debt sales were reclassified to Credit loss expenses. The reclassification resulted in understatement of Credit loss expenses and overstatement of Other operating expenses by EUR 79 469 in statement of profit and loss for the prior 3 months ended 31 March 2022.
• (g) Abovementioned corrections resulted in understatement of retained earnings by EUR 98 661 as at 31 March 2022.

(1) Accounting policies (continued)

The aforementioned corrections were performed by restating each of the affected financial statements line items for the prior 3 months ended 31 March period, as follows:

Statement of profit or loss

	Reference	Before restatement for 3 months ended 31 March 2022	Restatement	After restatement for 3 months ended 31 March 2022
Net sales	(a), (e)	1 465 757	(219 996)	1 245 761
Cost of sales	(a), (e)	(894 488)	114 765	(779 723)
Interest income and similar income	(a), (d)	6 010 037	330 257	6 340 294
Interest expenses and similar expenses		(688 911)	-	(688 911)
Credit loss expense	(b), (f)	(1 083 489)	(326 796)	(1 410 285)
Gross profit		4 808 906	(101 770)	4 707 136
Selling expenses		(1 757 066)	-	(1 757 066)
Administrative expenses		(1 279 404)	-	(1 279 404)
Other operating income		24 275	-	24 275
Other operating expenses	(f)	(195 386)	79 469	(115 917)
Profit before corporate income tax		1 601 325	(22 301)	1 579 024
Income tax expenses		(187 656)	-	(187 656)
Net profit		1 413 669	(22 301)	1 391 368

The aforementioned corrections were performed by restating each of the affected financial statements line items for the prior 3 months ended 31 March period, as follows:

Statement of changes in equity

	Share capital	Share premium	Retained earnings	Total
	EUR	EUR	EUR	EUR
As at 01 January 2022, as previously	4 531 959	6 890 958	5 954 404	17 377 321
Restatement, reference (g)	-	-	98 661	98 661
Restated as at 01 January 2022	4 531 959	6 890 958	6 053 065	17 475 982
Profit for the reporting period, reference (a), (b), (d), (e), (f) Dividends paid	- -	- -	1 391 368 (779 497)	1 391 368 (779 497)
As at 31 March 2022	4 531 959	6 890 958	6 664 936	18 087 853

(2) Net sales

Net revenue by type of revenue

	For 3 months ended 31 March
	2023	2022
		(restated,
		Note 1)
	EUR	EUR
Income from sales of goods	1 909 815	948 214
Income from sales of precious metals	140 936	142 283
Other income, loan and mortgage realisation and storage commission	252 055	155 264
	2 302 806	1 245 761

All net sales are generated in Latvia.

(3) Interest income and similar income

	For 3 months ended 31 March
	2023	2022 (restated, Note 1)
	EUR	EUR
Interest income on unsecured loans according to effective interest rate method	7 257 028	5 219 687
Interest income on pawn loans	1 521 416	1 120 400
Other interest income according to effective interest rate method	677	207
	8 779 121	6 340 294

(4) Interest expenses and similar expenses

	For 3 months ended 31 March
	2023	2022
	EUR	EUR
Interest expense on other borrowings	1 143 711	339 292
Bonds' interest expense	607 908	303 176
Interest expense on lease liabilities for leased premises	39 691	45 880
Interest expense lease liabilities for leased vehicles	614	422
Net loss on foreign exchange	36	141
	1 791 960	688 911

(5) Selling expenses

	For 3 months ended 31 March
	2023	2022
	EUR	EUR
Salary expenses	794 264	680 082
Advertising	230 595	206 037
Social insurance	186 714	159 828
Depreciation of right-of-use assets - premises	162 286	156 992
Non-deductible VAT	156 011	114 069
Depreciation of property, plant and equipment and amortisation of intangible assets	118 151	103 344
Maintenance expenses	113 834	79 600
Utilities expenses	105 419	74 607
Provisions for unused annual leave	33 817	28 359
Transportation expenses	17 805	26 388
Depreciation of right-of-use assets - motor vehicles	2 160	5 577
Other expenses	141 516	122 183
	2 062 572	1 757 066

(6) Administrative expenses

	For 3 months ended 31 March
	2023	2022
	EUR	EUR
Salary expenses	983 304	764 421
Social insurance	250 844	179 772
Bank commission	212 416	133 930
Communication expenses	148 939	38 092
Provisions for unused annual leave	39 011	40 216
State fees and duties, licence expenses	33 817	34 289
Depreciation of right-of-use assets - premises	23 479	23 479
Legal advice	11 561	21 749
Depreciation of right-of-use assets - motor vehicles	-	1 548
Other administrative expenses	61 480	41 908
	1 764 851	1 279 404

(7) Basic earnings and Diluted earnings per share

Earnings per share are calculated by dividing the net result for the year after taxation attributable to shareholders by the weighted average number of shares in issue during the year. The dilution effect when calculation the Diluted earnings per share comes from share options granted on 1 December 2022 to employees of the Group. The table below presents the income and share data used in the computations of basic earnings and Diluted earnings per share for the Group:

	2023 EUR	For 3 months ended 31 March 2022 EUR
Net profit attributed to shareholders Weighted average number of shares Earnings per share	1 613 086 45 319 594 0.036	1 391 368 45 319 594 0.031
Weighted average number of shares used for calculating the diluted earnings per shares	45 367 691	45 319 594
Diluted earnings per share	0.036	0.031

(7) Basic earnings and Diluted earnings per share (continued)

The table below presents the income and share data used in the computations of earnings per share for the Group:

	Change EUR	Actual number of shares after transaction EUR	Actual number of shares after transaction EUR
For 3 months ended 31 March 2022
Number of shares at the beginning of the period		45 319 594	45 319 594
Number of shares at the end of the period		45 319 594	45 319 594
Weighted average number of shares:			45 319 594
Weighted average number of share options for
DelfinGroup AS employees granted in Q1 2022			-
Weighted average potential number of shares			45 319 594
For 3 months ended 31 March 2023
Number of shares at the beginning of the period		45 319 594	45 319 594
Number of shares at the end of the period		45 319 594	45 319 594
Weighted average number of shares:			45 319 594
Weighted average number of share options for
DelfinGroup AS employees granted in Q12023*			48 097
Weighted average potential number of shares			45 367 691

*.Number of shares granted on 1 December 2022 73 968 with FV at grant date 1.258 EUR and option exercise price 0.100 EUR.

(8) Loans and receivables

a) Loans and receivables by loan type

	Group	Group
	31 March 2023	31 December 2022
	EUR	EUR
Pawn loans measured at fair value
Long-term pawn loans	268 543	220 216
Short-term pawn loans	5 261 125	5 880 246
Interest accrued for pawn loans	211 587	221 906
Pawn loans measured at fair value, total	5 741 255	6 322 368
Debtors for loans issued without pledge
Long-term debtors for loans issued without pledge	52 460 808	45 929 912
Short-term debtors for loans issued without pledge	17 938 505	17 487 363
Interest accrued for loans issued without pledge	2 364 291	2 189 607
Debtors for loans issued without pledge, total	72 763 604	65 606 882
Loans and receivables before allowance, total	78 504 859	71 929 250
ECL allowance on loans issued without pledge	(5 051 818)	(4 411 443)
Loans and receivables	73 453 041	67 517 807

All loans are issued in euros. Weighted average term for consumer loans is 2.5 years and for pawn loans is one month.

The Group signed a contract with a third party for the receivable amounts regular debt sale to assign debtors for loans issued which are outstanding for more than 60 days. Losses from these transactions were recognised in the current period.

Pawn loans in the amount of EUR 5 741 255 (31.12.2022: EUR 6 322 368) are secured by the value of the collateral and measured at fair value.

(8) Loans and receivables (continued)

b) Allowance for impairment of loans issued without pledge at amortised cost

An analysis of changes in the gross carrying value for loans issued and corresponding ECL during the three-month period ended 31 March 2023 is as follows:

Group	Stage 1	Stage 2	Stage 3	Total
Gross carrying value as at 1 January 2023	60 306 047	4 160 505	1 140 330	65 606 882
New assets originated or purchased	18 337 456	-	-	18 337 456
Assets settled or partly settled	(8 025 941)	(1 582 681)	(116 612)	(9 725 234)
Assets derecognised due to debt sales	-	(1 381 953)	(137 191)	(1 519 144)
Assets written off	-	-	(77 728)	(77 728)
Effect of interest accruals	230 303	(92 718)	3 787	141 372
Transfers to Stage 1	260 772	(249 290)	(11 482)	-
Transfers to Stage 2	(3 273 192)	3 278 870	(5 678)	-
Transfers to Stage 3	(181 711)	(432 174)	613 885	-
At 31 March 2023	67 653 734	3 700 559	1 409 311	72 763 604
Group	Stage 1	Stage 2	Stage 3	Total
ECL as at 1 January 2023	2 794 161	834 239	783 043	4 411 443
New assets originated or purchased	1 159 194	-	-	1 159 194
Assets settled or partly settled	(502 258)	(446 048)	(44 518)	(992 824)
Assets derecognised due to debt sales	-	(415 302)	(52 367)	(467 669)
Assets written off	-	-	(29 381)	(29 381)
Effect of interest accruals	19 912	(407)	85 040	104 545
Transfers to Stage 1	78 515	(74 836)	(3 679)	-
Transfers to Stage 2	(224 732)	226 879	(2 147)	-
Transfers to Stage 3	(3 492)	(129 091)	132 583	-
Impact on period end ECL changes in credit risk and
inputs used for ECL calculation	(143 971)	701 071	309 410	866 510
At 31 March 2023	3 177 329	696 505	1 177 984	5 051 818

c) Age analysis of loans issued without pledge at amortised cost:

	Group 31 March 2023 EUR	Group 31 December 2022 EUR
Receivables not yet due	64 679 795	57 445 337
Outstanding 1-30 days	4 641 632	4 555 603
Outstanding 31-90 days	2 032 864	2 465 106
Outstanding 91-180 days	449 516	328 818
Outstanding for 181-360 days	471 348	383 242
Outstanding for more than 360 days	488 449	428 776
Total claims against debtors for loans issued	72 763 604	65 606 882

d) Age analysis of provision for bad and doubtful trade debtors:

	Group 31 March2023 EUR	Group 31 December 2022 EUR
For trade debtors not yet due	2 615 055	2 252 622
Outstanding 1-30 days	745 417	661 969
Outstanding 31-90 days	734 054	789 067
Outstanding 91-180 days	280 074	184 076
Outstanding for 181-360 days	309 705	245 456
Outstanding for more than 360 days	367 513	278 253
Total provisions for bad and doubtful trade debtors	5 051 818	4 411 443

Loan loss allowance has been defined based on collectively assessed impairment. For ECL calculation purposes debtors for loans issued without pledge were grouped by brands – Banknote and VIZIA.

(9) Retained earnings

	For 3 months ended 31 March
	2023	2022
	EUR	EUR
Balance as at 1 January	6 589 761	5 954 404
Impact of correction of errors (Note 1)	-	98 661
Net profit for the period	1 613 086	1 391 368
Dividends declared:
Interim dividends of 0.0185 EUR (2022: 0.0172 EUR) per share	(838 412)	(779 497)
Balance as at 31 March	7 364 435	6 664 936

(10) Bonds issued

	Group 31 March 2023 EUR	Group 31 December 2022 EUR
Total long-term part of bonds issued	7 406 149	4 330 630
Bonds issued Interest accrued	15 519 532 28 720	14 758 261 24 849
Total short-term part of bonds issued	15 548 252	14 783 110
Bonds issued, total Interest accrued, total	22 925 681 28 720	19 088 891 24 849
Bonds issued net	22 954 401	19 113 740

As of 31 March 2023, the Parent company of the Group has outstanding bonds (ISIN LV0000850048) in the amount of EUR 5 000 000, registered with the Latvia Central Depository and issued in a closed offer on 9 July 2021 on the following terms: number of bonds issued - 5 000, nominal value - EUR 1 000 per each bond, coupon rate – 9.75%, coupon is paid once a month on the 25th date. The principal amount (EUR 1 000 per each bond) is to be repaid by 25 August 2023. The bonds are not secured.

As of 31 March 2023, the Parent company of the Group has outstanding bonds (ISIN LV0000802536) in the amount of EUR 10 000 000, registered with the Latvia Central Depository on the following terms – number of financial instruments 10 000, with a nominal value 1 000 euro per each bond, coupon rate – 8.00%, coupon is paid once a month on the 25th date. The principal amount (EUR 1 000 per each bond) is to be repaid by 25 November 2023. The bond issue in full amount is traded on NASDAQ Baltic North Alternative market as of 21.06.2022. The bonds are not secured.

On 7 July 2022 the Parent company of the Group has started a closed bond offering (ISIN LV0000850055) in the amount of EUR 10 000 000. The offering has been registered with the Latvia Central Depository on the following terms – number of financial instruments is 10 000, with a nominal value 1 000 euro per each bond, coupon rate –3M EURIBOR + 8.75%, coupon is paid once a month on the 25th date. New bonds are issued periodically taking into account the need for financing. As of 31 March 2023, bonds in total of EUR 8 517 000 have been issued. The principal amount (EUR 1 000 per each bond) is to be repaid by 25 September 2024. The bonds are not secured.

As at 31 March 2023 the Group is in compliance with covenants stated in all Terms of the Notes Issue. Please see covenants disclosed in Management report.

(11) Other borrowings

	Group 31 March 2023	Group 31 December 2022
	EUR	EUR
Other long-term loans	16 325 516	15 004 505
Total other long-term loans	16 325 516	15 004 505
Other short-term loans	20 560 236	19 856 253
Total other short-term loans	20 560 236	19 856 253
Other loans, total	36 885 752	34 860 758

Amount of other borrowings is represented by loans received from crowdfunding platform Mintos, a platform registered in the European Union. The weighted average annual interest rate as of 31 March 2023 is 12.5%. According to the loan agreement with SIA Mintos Finance the loans matures according to the particular loan agreement terms concluded by the Group with its customers.

To ensure fulfilment of liabilities the Group has registered commercial pledge, see note 14. As at 31 March 2023 the Group is in compliance with covenants.

(12) Related party transactions

Group's transactions

Transactions for 3 months 2023	Transactions in 2022 EUR
	-
	-
	-
14 521	24 235
-	-
-	-
	-
	3 900
	EUR - - - - -

Bonds issued to shareholders of the related companies

	Group 31 March 2023	Group 31 December 2022
	EUR	EUR
Shareholders	200 000	200 000
Long-term part of bonds issued to shareholders of the related companies, total	200 000	200 000
Shareholders	307 000	307 000
Short-term part of bonds issued to shareholders of the related companies, total	307 000	307 000
Bonds issued to related companies, total	507 000	507 000

(13) Segment information

For management purposes, the Group is organised into four operating segments based on products and services as follows:

Pawn loan segment	Handling pawn loan issuance, sale of pawn shop items in the branches and online.
Retail of pre-owned goods	Sale of pre-owned goods in the branches and online purchased from customers.
Consumer loan segment	Handling consumer loans to customers, debt collection activities and debt sales to external debt collection companies.
Other operations segment	Providing loans for real estate development, general administrative services to the companies of the Group, transactions with related parties, dividends payable. Loans for real estate development are no longer issued and are fully recovered.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance, as explained in the table below, is measured on consolidation basis. Management mainly focuses on net sales, interest income and similar income and profit before taxes of the segment. For the costs, for which direct allocation to a particular segment is not attributable, the judgement of the management is used to allocate general costs by segments, based on the following cost allocation drivers – loan issuance, segment income, segment employee count, segment employee costs, the amount of segment assets.

Based on the nature of the services, the Group's operations can be divided as follows (statement of profit or loss is compared for the same period of the previous year, balance sheet positions are compared to the data as at 31.12.2022):

EUR		Consumer loans		Pawn loans		Retail of pre-owned goods	Other		Total
	For 3 months period ended 31 March		For 3 months period ended 31 March		For 3 months period ended 31 March		For 3 months period ended 31 March		For 3 months period ended 31 March
	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Assets	72 656 035	65 716 677	7 444 352	8 385 899	4 993 907	3 053 982	844	1 450	85 095 138	77 158 008
Liabilities of the segment	54 030 970	49 484 402	6 353 454	7 101 708	4 956 109	2 465 174	839 194	988	66 179 727	59 052 272
Net sales Interest	-	-	-	-	2 302 806	1 245 761	-	-	2 302 806	1 245 761
income and similar income Net	7 257 028	5 111 237	1 521 416	1 228 849	-	-	677	208	8 779 121	6 340 294
performance of the segment	2 840 157	1 815 115	520 072	328 443	252 502	120 462	4 545	3 915	3 617 276	2 267 935
Financial (expenses)	(1 523 433)	(586 308)	(141 344)	(66 644)	(127 183)	(35 959)	-	-	(1 791 960)	(688 911)
Profit/(loss) before taxes	1 316 724	1 228 807	378 728	261 799	125 319	84 503	4 545	3 915	1 825 316	1 579 024
Corporate income tax	(153 096)	(146 035)	(44 035)	(31 113)	(14 571)	(10 043)	(528)	(465)	(212 230)	(187 656)

(14) Guarantees issued, pledges

The Group has registered four groups of commercial pledges by pledging its assets and claim rights for a maximum amount of EUR 37.8 million as collateral registered to collateral agent SIA Eversheds Sutherland Bitāns (in favour of SIA Mintos Finance) and to SIA Mintos Finance No.20 and AS Mintos Marketplace to provide collateral for loans placed on the Mintos P2P platform.

As of 31 March 2023, the amount of secured liabilities constitutes EUR 36 885 752 (As of 31 December 2022 EUR 34 860 758).

(15) Subsequent events

After end of reporting period there were no significant events which would have impact to these interim reports.

Didzis Ādmīdiņš Chairman of the Board Aldis Umblejs Board Member Sanita Pudnika Board Member