REVENUE UP 44%, NET PROFIT UP 38% REFLECTING STRONG VOLUME GROWTH ACROSS THE
BUSINESS
RIGA, Latvia--(BUSINESS WIRE (http://www.businesswire.com/))-- Regulatory News:
4finance Holding S.A. (the ‘Group’), one of Europe’s largest online and mobile
consumer lending groups, today announces unaudited consolidated results for the
twelve months ended 31 December 2015 (the ‘Period’).
Financial Highlights
· Revenue up 44% to EUR 318.3 million in the Period compared with EUR 220.8
million in the year ended 31 December 2014.
· The Group’s profit for the twelve months to 31 December 2015 was EUR 64.0
million, an increase of 38% from EUR 46.3 million in 2014.
· Net loan portfolio as of 31 December 2015 was EUR 309.2 million, up 28.1%
from a year ago.
· Cost to revenue ratio for the Period was 42%, vs. 37% for the twelve months
ended 31 December 2014.
· Financial strength enhanced with a capital-to-assets ratio of 38% as of 31
December 2015 (35% as of 31 December 2014).
· Credit discipline maintained with non-performing loans to loan issuance
ratio of 9.0% as of 31 December 2015 (8.8% as of 31 December 2014).
· EBITDA was EUR 109.9 million for the Period, leading to an adjusted interest
coverage ratio of 4.2x.
Operational Highlights
· Total number of registered customers reached 4.63 million as of 31 December
2015, up 39% from a year ago.
· A total of EUR 1,062 million in loans were issued during the Period, up 32%
compared with EUR 805 million in 2014.
· Opened in four new countries in 2015: Argentina, Armenia, Mexico and
Romania.
· Continued growth of Instalment loans, now 34% of performing loan portfolio,
set to continue in 2016.
· Successful pilot of Line of Credit product in Finland, being rolled out to
further markets.
· Enhanced management team, with new Chief Marketing and Chief Risk Officers
joining in 2015.
· Seeing benefits of new technology deployments with improved conversion rates
on redesigned product websites, efficiencies delivered by marketing technology
and more predictive and flexible risk scoring models.
Kieran Donnelly, CEO of 4finance, commented:
“This strong performance in 2015, with revenue up 44% and profit up 38% to EUR
64.0 million, reinforces our track record of profitable growth that has seen a
35% compound annual increase in profit over the past three years. We provided
over one billion Euros of credit to our customers in 2015 and just last month
issued our 10 millionth loan - both milestones underline the scale of the
4finance business and the volume of our proprietary data.
"Our existing European businesses performed well in 2015, with countries like
Spain, Georgia and the Czech Republic showing the returns from our initial
investments there 2-3 years ago. Similarly, our new operations in Latin America
are expected to contribute meaningfully to volumes this year, and then be
drivers of profitability from 2017 onwards.
"As a responsible lender, we are supportive of the regulatory consultations and
developments in several of our markets and have worked hard to adapt our
products where necessary. We were pleased to re-start lending in Lithuania in
January and view full compliance with regulation as a critical part of a
sustainable business.
“We invested heavily in our technology platform and our people in 2015 and
continue to do so given the scale of opportunity we see for growth - both
organic and via acquisitions - in building a global leader in digital consumer
finance."
Key Financial Ratios
As of / 12 months to 31 December
2015 2014 2013
Net loan portfolio (in 309.2 241.4 177.9
millions of EUR)(1)
Capital/assets ratio(2) 38% 35% 29%
Capital/net loan 56% 47% 37%
portfolio(3)
Adjusted interest 4.2x 3.7x 4.6x
coverage(4)
Profit before tax 23% 27% 35%
margin(5)
Return on average 41% 54% 82%
equity(6)
Cost/revenue ratio(7) 42% 37% 38%
Net impairment to 25% 25% 18%
revenue ratio(8)
Non-performing loans to 9.0% 8.8% 9.2%
loan issuance ratio(9)
Notes:
(1) Gross loan portfolio less provisions for bad debts.
(2) Total equity/total assets (excluding the effect from the 2015 Notes’
defeasance for 2014)
(3) Total equity/net loan portfolio.
(4) Adjusted EBITDA/interest expense.
(5) Profit before tax/interest income.
(6) Profit from continuing operations/average equity (total equity as of the
start and end of each period divided by two).
(7) General administrative expenses/interest income.
(8) Net impairment losses on loans and receivables/interest income.
(9) Non-performing loans with a delay of over 90 days/value of loans issued. The
value of loans issued represents loans issued for the two-year period before
commencement of the 90 day past-due period, eg for 31 December 2015: 1 October
2013 to 30 September 2015.
Contacts
Email: investorrelations@4finance.com
HQ Lielirbes iela 17a-8, Riga, LV-1046, Latvia
Address:
Website:
www.4finance.com (http://cts.businesswire.com/ct/CT?id=smartlink&url=http
%3A%2F%2Fwww.
4finance.com&esheet=51290089&newsitemid=0&lan=en
-US&anchor=www.4finance.com&index=1&md5=1fe8b40e4ee21d860e795a988abc
afd4)
Conference call
A conference call with management to discuss these results is scheduled
for Tuesday, March 1 at 16:00 UK time. To register, please
visit www.4finance.com/investors (http://cts.businesswire.com/ct/CT?id=smartlink
&
url=http%3A%2F%2Fwww.4finance.com%2Finvestors&esheet=51290089&newsitemid=0&lan=e
n
-US&anchor=www.4finance.com%2Finvestors&index=2&md5=2f7978b804e14069bf1a94e1c4cd
f
7dc).
About 4finance
Established in 2008, 4finance is one of the largest and fastest growing online
and mobile consumer lending groups in Europe with operations in 14 countries.
Putting innovative data-driven analysis into all aspects of the business,
4finance has grown rapidly, issuing over EUR 3 billion in single payment and
instalment loans to date.
4finance operates through a portfolio of market leading brands with strong
regional presence including Vivus, SMSCredit and Zaplo. A responsible lender,
offering simple, convenient and transparent products and service, 4finance is
meeting growing customer demand from those under-served by conventional lending.
4finance is headquartered in Riga, Latvia and currently operates in Argentina,
Armenia, Bulgaria, the Czech Republic, Denmark, Finland, Georgia, Latvia,
Lithuania, Mexico, Poland, Romania, Spain and Sweden. To support its
international expansion, 4finance continues to pursue a twin-track strategy of
strong organic growth bolstered by targeted acquisition.
Forward looking statements
Certain statements in this document are “forward-looking statements”. These
statements are based on management’s current expectations and are subject to
uncertainty and changes in circumstances. Actual results may differ materially
from those included in these statements.
FINANCIAL REVIEW
Income Statement
The table below sets out the condensed consolidated statement of profit and loss
for the twelve months ended 31 December 2015 and 31 December 2014.
12 months to 31 December
2015 2014
(unaudited) (audited) % change
(in millions of EUR)
Interest income 318.3 220.8 44%
Interest expense (28.7) (23.8) 21%
Net interest income 289.6 197.1 47%
Net impairment losses (78.9) (54.2) 46%
on loans and
receivables
General administrative (133.9) (81.1) 65%
expenses
Other income/(expense) (2.3) (1.9) 21%
Profit before tax 74.5 59.9 24%
Corporate income tax (15.6) (11.6) 34%
for the reporting
period
Profit from continuing 58.9 48.3 22%
operations
Profit from 5.1 (2.0) n/a
discontinued
operations, net of tax
Profit for the period 64.0 46.3 38%
Interest income
The table below shows key drivers of interest income, or revenue, i.e. business
volumes and interest rates.
12 months to 31 December
2015 2014 % change
(in millions of EUR)
Total value of loans 1,062.3 804.6 +32%
issued
Average net loan 275.3 209.7 +31%
portfolio
Average interest rate 116% 105%
on loans to customers
Interest income, or revenue, for the Period was EUR 318.3 million, a 44%
increase compared with EUR 220.8 million for the twelve months ended 31 December
2014. This reflects the 31% increase in the average balance of the net loan
portfolio and the 11 percentage point increase in average interest rate. The
value of loans issued increased across the majority of our markets, and higher
growth continues to be seen in Poland, Georgia and Spain, where interest rates
are also typically higher.
Interest expense
Interest expense for the Period was EUR 28.7 million, a 21% increase compared
with EUR 23.8 million for the twelve months ended 31 December 2014. This
increase is mainly due to the USD 200 million bond issuance in August 2014, SEK
225 million bond issued in March 2015 and SEK 150 million additional issue in
September 2015. The average balance of the Group’s indebtedness in the Period
increased to EUR 235.3 million from EUR 180.4 million, with an average interest
rate of 12.2%, a slight improvement on the prior year.
Net impairment losses on loans and receivables
Net impairment losses for the Period were EUR 78.9 million, a 46% increase
compared with EUR 54.2 million for the twelve months ended 31 December 2014. The
increase in net impairment losses primarily reflects the expansion of the
Group’s portfolio in both existing and new jurisdictions, as well as its
application of prudent, conservative impairment policies. Net impairment losses
represented 25% of interest income, the same ratio as last year.
General administrative expenses
General administrative expenses reported for the Period were EUR 133.9 million,
a 65% increase compared with EUR 81.1 million reported for the twelve months
ended 31 December 2014. The Group continued its significant investment across
the business in the fourth quarter to support future growth. The increase in
personnel costs was mainly attributable to hiring in product development, IT,
risk, legal and finance. Marketing campaigns were used to maintain leading
positions in existing markets. The Group has also been investing in its IT
platforms to ensure the appropriate infrastructure is in place to support the
development of the business. Legal and consulting expense and other costs
include certain one-off items related to the evaluation of potential
acquisitions and funding opportunities.
The table below sets out a breakdown of the Group’s general administrative
expenses.
12 months to 31 December
2015 2014
(in millions of EUR)
Marketing and sponsorship 50.1 34.2
Personnel costs 39.4 23.1
IT expenses 11.2 3.5
Legal and consulting 7.5 3.8
Debt collection costs 7.0 3.8
Application inspection costs 4.0 3.7
Rent and utilities 2.5 1.5
Depreciation and amortization 1.6 0.9
Other 10.6 6.6
Total 133.9 81.1
For 2015 and 2014, marketing and sponsorship costs accounted for 37% and 42%
respectively, and personnel costs accounted for 29% and 28%, respectively, of
general administrative expenses.
Variable costs (i.e., all marketing and sponsorship costs, personnel costs,
application inspection costs, IT expenses, debt collection costs, communication
expenses and bank services) accounted for 89% of total administrative costs in
both 2015 and 2014. Such costs strongly correlate to movements in loan sales.
Other income/(expense)
Other expense for the Period amounted to EUR 2.3 million. For the twelve months
ended 31 December 2014, other expense was EUR 1.9 million. The increase in other
expense was mainly due to foreign exchange losses from a weaker Euro, although
the effect was largely mitigated by the Group's hedging positions.
Profit before tax
For the reasons stated above, the Group’s profit before tax for the Period was
EUR 74.5 million, a 24% increase compared with EUR 59.9 million for the twelve
months ended 31 December 2014. The profit before tax margin, i.e., profit before
tax as a percentage of interest income, was 23% for the Period and 27% for the
twelve months ended 31 December 2014.
Corporate income tax
The Group’s corporate income tax expense increased by 34% to EUR 15.6 million
for the Period, compared with EUR 11.6 million for the twelve months ended 31
December 2014.
The table below sets out a breakdown of the Group’s corporate income tax for the
Period and 2014.
12 months to 31 December
2015 2014
(in millions of EUR)
Current tax 20.2 18.4
Deferred tax (4.6) (6.8)
Total 15.6 11.6
For 2015 and 2014, the Group’s effective tax rate was 21% and 19% respectively.
Profit from continuing operations
For the reasons stated above, the Group’s profit from continuing operations for
the Period was EUR 58.9 million, a 22% increase compared with EUR 48.3 million
for the twelve months ended 31 December 2014.
Profit from discontinued operations, net of tax
In connection with the discontinuation of operations in Estonia and decisions to
sell the Russia, United Kingdom and North America business segments, the results
of operations in these segments were reflected separately as discontinued
operations in the consolidated statement of profit and loss for the Period. For
the full year 2014, the United Kingdom, North America and Russia business
segments were reflected separately as discontinued operations.
For the Period, the Group recorded a profit from discontinued operations, net of
tax, of EUR 5.1 million, compared with a loss of EUR 2.0 million for the twelve
months ended 31 December 2014.
Profit for the period
For the reasons stated above, profit for the Period was EUR 64.0 million, a 38%
increase compared with EUR 46.3 million for the twelve months ended 31 December
2014.
Other financial data – EBITDA and Adjusted EBITDA
As of 31
December
2015 2014
2013
(in
millions
of EUR)
Profit for 64.0 46.3
35.8
the
period
Provision 15.6 11.6
8.5
for
corporate
income
tax
Interest 28.7 23.8
15.4
expense
Depreciation 1.6 0.9
0.7
and
amortization
EBITDA 109.9 82.6
60.4
Adjustments 9.6 5.6
10.8
Adjusted 119.5 88.2
71.2
EBITDA (1)
Note:
(1) Adjusted EBITDA is a non-IFRS measure that represents EBITDA (profit for the
period plus tax, plus interest expense, plus depreciation and amortization) as
adjusted by income/loss from discontinued operations, non-cash gains and losses
attributable to movement in the mark-to-market valuation of hedging obligations
under IFRS, goodwill write-offs and certain other one-off or non-cash items as
outlined in the Offering Memorandum of the 2019 Notes. Adjusted EBITDA, as
presented in this report, may not be comparable to similarly-titled measures
that are reported by other companies due to differences in the way these
measures are calculated.
Balance Sheet
The table below sets out the Group’s condensed consolidated statement of its
financial position.
31 December 2015 31 December 2014
(unaudited) (audited)
(in millions of EUR)
Cash and cash equivalents 56.9 33.7
Loans and advances due from 309.2 241.4
customers
Assets held for sale — 4.4
Property and equipment 4.3 2.1
Intangible assets 18.0 2.8
Deferred tax asset 15.4 10.7
Current tax assets 5.5 4.7
Financial instruments at fair 10.6 18.6
value through profit or loss
Prepaid expenses 2.7 3.3
Other assets 28.6 48.3
Total assets 451.2 370.0
Loans and borrowings 239.1 231.6
Liabilities held for sale — 0.7
Corporate income tax payable 7.6 6.4
Provisions 2.4 —
Other liabilities 29.4 18.3
Total liabilities 278.5 257.0
Share capital 35.8 35.8
Retained earnings 171.0 107.6
Reorganization reserve (32.6) (32.6)
Currency translation reserve (2.8) 0.9
Share based payment reserve 0.1 0.1
Obligatory reserve 0.2 0.1
Total equity attributable to 171.6 111.9
the Group’s equity holders
Non-controlling interests 1.1 1.1
Total equity 172.7 113.0
Total shareholders’ equity 451.2 370.0
and liabilities
Assets
The Group had total assets of EUR 451.2 million as of 31 December 2015, compared
with EUR 370.0 million as of 31 December 2014, representing an increase of EUR
81.2 million, or 22%. This increase was mainly due to an increase of EUR 67.8
million in loans and advances due from customers and an increase of EUR 23.2
million in cash. Partially offsetting these were decreases in financial
instruments at fair value and other assets. Growth of the Group's intangible
assets mainly relates to capitalised development costs and investments in its IT
platform. The Group finalised its reorganisation of US entities in the fourth
quarter of 2015, and intangible assets that were previously moved out of the
Group's asset base in the process of transition were returned to its balance
sheet.
As of 31 December 2015 and 31 December 2014, 81% and 74% respectively of the
Group’s assets were self-liquidating (i.e., loans and advances from customers
and cash as a percentage of total assets).
Loan Portfolio
As of 31 December 2015, the Group’s net loan portfolio equaled EUR 309.2
million, compared with EUR 241.4 million as of 31 December 2014, representing an
increase of EUR 67.8 million, or 28%. The Group’s loan portfolio accounted for
69% of total assets as of 31 December 2015 and 65% of total assets as of 31
December 2014.
Classification of the Group’s Loan Portfolio
The following table sets out the classification of the Group’s total loan
portfolio in terms of performing and non-performing loan portfolios as of the
dates indicated.
Loan 31 December 31
portfolio 2015 December
2014
Gross Amount Allowance Net % of Net Gross
Allowance Net % of Net
for Amount Portfolio Amount
for Amount Portfolio
doubtful
doubtful
debts
debts
(in millions
of EUR,
except
percentages)
Performing 268.4 (24.2) 244.2 79.0% 208.3
(17.1) 191.3 79.2%
Non 156.7 (91.7) 65.0 21.0% 108.5
(58.4) 50.1 20.8%
-performing
Total (1) 425.1 (115.9) 309.2 100.0% 316.8
(75.5) 241.4 100.0%
Note: (1) Loan amounts include accrued interest.
Performing Loan Portfolio
The following table shows the Group’s performing loan portfolio by product as of
the dates indicated.
31 December 31
2015 December
2014
Amount % of Amount % of
Portfolio Portfolio
Performing loan (in millions
portfolio by of EUR,
product: (1) except
percentages)
Single Payment Loans 177.3 66.1% 150.4 72.2%
Instalment Loans 90.6 33.8% 57.9 27.8%
Line of Credit 0.5 0.2% 0.0 0.0%
Total performing 268.4 100.0% 208.3 100.0%
loan portfolio
Note:
(1) Loan amounts include accrued interest.
Non-performing Loan Portfolio
The Group has written off any loans which have been overdue for more than 730
days. As of 31 December 2015, the Group’s total non-performing loan portfolio
was EUR 156.7 million, which represents 9.0% of the value of loans issued
between 1 October 2013 and 30 September 2015. Given the mostly short-term nature
of the Group’s lending, the majority of loans issued during a reporting period
are repaid prior to the period end, while non-performing loans are accumulated
for 730 days. The Group’s non-performing loan portfolio as of 31 December 2015
represented 37% of total gross loans outstanding as of that date. EUR 13.5
million, or 8.6%, of this was non-performing interest. The Group’s total gross
non-performing loan portfolio increased by 48.2 million, or 44%, during the
Period mainly due to increased loan issuance.
The following table sets out an analysis of the Group’s non-performing loan
portfolio (including non-performing interest) by product as of the dates
indicated.
31 December 2015 31 December 2014
(in millions of EUR, except percentages)
Non-performing loan
portfolio by product: (1)
Single Payment Loans 118.4 84.9
Instalment Loans 38.3 23.6
Total non-performing loan 156.7 108.5
portfolio
Value of loans issued(2) 1,739 1,226
Non-performing loans as a 9.0% 8.8%
share of value of loans
issued
Allowance for doubtful NPL 91.7 58.4
debts
Allowance for doubtful NPL 59% 54%
debts / non-performing loans
Overall allowance / NPL 74% 70%
coverage ratio
Average Loss Given Default 49% 45%
rate
Notes:
(1) Loan amounts include accrued interest.
(2) The value of loans issued as of a particular date represent loans issued for
the two-year period before commencement of the 90 day past-due period.
Therefore, the applicable period for each reporting date is as follows: for 31
December 2015: 1 October 2013 to 30 September 2015; for 31 December 2014: 1
October 2012 to 30 September 2014.
Liabilities
The Group had total liabilities of EUR 278.5 million as of 31 December 2015,
compared with EUR 257.0 million as of 31 December 2014, representing an increase
of EUR 21.5 million. Liabilities mainly consist of loans and borrowings, which
increased slightly overall as the 2015 Notes and some other loans were repaid,
but this was more than offset by the issuance of the 2018 Notes and the increase
in EUR amount of the 2019 Notes due to the change in EUR/USD exchange rate.
Loans and borrowings
As of 31 December 2015, the Group had loans and borrowings of EUR 239.1 million,
compared with EUR 231.6 million as of 31 December 2014. The Group’s loans and
borrowings accounted for 86% of total liabilities as of 31 December 2015 and 90%
of total liabilities as of 31 December 2014. The table below sets out the loans
and borrowings by lender as of the dates indicated.
31 December 2015 31 December 2014
Long term (in millions of EUR)
AS Trasta Komercbanka 4.7 6.2
2019 Notes 176.4 157.9
2018 Notes 40.8 —
Other(1) 0.7 12.6
Total long term 222.6 176.7
Short term(2)
AS Trasta Komercbanka 1.2 —
2019 Notes 8.2 7.3
2018 Notes 1.2 —
2015 Notes — 43.4
Other(1) 5.8 4.2
Total short term 16.5 54.9
Total loans and borrowings 239.1 231.6
Note:
(1) ‘Other’ consists primarily of loans with related parties.
(2) Includes accrued but unpaid interest.
In May 2011, AS 4finance entered into a credit line agreement with AS Trasta
Komercbanka (‘TKB’), which allows borrowings of up to EUR 7.7 million (the ‘TKB
Credit Line’). As of 31 December 2015, the amount outstanding under the TKB
Credit Line was EUR 5.9 million at an interest rate of 7%.
In August 2013, AS 4finance listed USD 170.0 million of 13% notes (the ‘2015
Notes’) on the Irish Stock Exchange, which were due on 31 January 2015. The
notes were fully repaid at maturity.
In August 2014, 4finance S.A. issued USD 200.0 million of 11.75% notes (the
‘2019 Notes’) which are listed on the Irish Stock Exchange and are senior to all
of the Group’s future subordinated debt. As of 31 December 2015, the amount
outstanding and accumulated interest under the 2019 Notes was EUR 184.6 million.
The 2019 Notes will mature in August 2019.
In March 2015, 4finance S.A. issued SEK 225.0 million of 11.75% notes (the ‘2018
Notes’) which are senior to all of the Group’s future subordinated debt. The
2018 Notes were listed on the corporate bond list of Nasdaq Stockholm in August
2015. In September 2015, a further SEK 150.0 million of 2018 Notes were issued
at par, bring the total amount outstanding to SEK 375.0 million out of a total
programme size of SEK 600.0 million. As of 31 December 2015, the amount
outstanding and accumulated interest under the 2018 Notes was EUR 42.1 million.
The 2018 Notes will mature in March 2018.
Equity
As of 31 December 2015, the Group’s total equity amounted to EUR 172.7 million,
compared with EUR 113.0 million as of 31 December 2014, representing an increase
of EUR 59.7 million, or 53%, which was mainly attributable to profits generated.
The Group has not paid any dividends to its shareholders within the Period and
its capital to assets ratio as of 31 December 2015 was 38%. The capital to net
loan portfolio ratio as of 31 December 2015 was 56%, reflecting the Group’s
strong capitalisation.
Off-Balance Sheet Arrangements
In connection with the Group’s line of credit product, it had contractual
obligations for undrawn credit facilities totalling EUR 0.1 million as of 31
December 2015. The Group has no other off-balance sheet commitments or
obligations outstanding.
Condensed Consolidated Statement of Cash Flows for the Period
The table below sets out the Group’s condensed consolidated statement of cash
flows.
12 months to 31 December
2015 2014
(in millions of EUR)
Cash flows from operating activities
Profit before taxes 79.6 57.9
Adjustments for:
Depreciation and amortization 1.8 1.2
Net losses on foreign exchange from borrowings 15.2 18.7
Increase in impairment allowance 40.6 39.3
Write-off and disposal of intangible and property 0.6 0.1
and equipment assets
Provisions 1.4 0.2
Interest income (2.1) (0.8)
Interest expenses 28.7 23.8
Profit or loss before adjustments for the effect 165.7 140.3
of changes to current assets and short term
liabilities
Adjustments for:
Increase in loans due from customers (107.0) (105.6)
Change in financial instruments measured at fair 8.0 (21.0)
value through profit or loss
Increase in other assets (10.4) (3.6)
Gains from sale of portfolio 3.6 1.8
Increase in accounts payable to suppliers, 11.1 8.7
contractors and other creditors
Gross cash flows from operating activities 71.2 20.5
Corporate income tax paid (19.8) (20.9)
Net cash flows from operating activities 51.4 (0.4)
Cash flows from investing activities
Purchase of property and equipment and intangible (19.3) (4.2)
assets
Loans issued to related parties (59.1) (14.8)
Loans repaid from related parties 48.5 14.6
Interest received 1.9 0.8
Acquisition of subsidiaries, net of cash acquired (1.4) 0.0
Net cash flows used in investing activities (29.3) (3.5)
Cash flows from financing activities
Loans received and notes issued 79.0 86.6
Repayment and repurchase of loans and notes (49.4) (52.5)
Interest payments (28.1) (18.7)
Dividend payments (0.6) (0.3)
Net cash flows from financing activities 0.9 15.1
Net increase/(decrease) in cash and cash 23.0 11.2
equivalents
Cash and cash equivalents at the beginning of the 34.4 21.1
period
Effect of exchange rate fluctuations on cash (0.6) 2.1
Cash and cash equivalents at the end of the 56.9 34.4
period
Net cash flows used in operating activities are calculated as profit before
taxes, adjusted for non-cash and other items and the effect of changes to
current assets and short-term liabilities, less corporate income tax paid. Net
cash flows generated in operating activities in the Period increased to EUR 51.4
million from EUR (0.4) million in the same period last year. The changes mainly
resulted from the increased profit in the Period, and the increase in fair value
of financial instruments, used for currency hedging.
The Group’s cash flows used in investing activities mainly include the purchase
and disposal of property, equipment and intangible assets, loans issued and
loans repaid. Investment in intangible assets was the largest component, mainly
comprising capitalised development costs and investments in the IT platform.
Loans issued to and repaid by related parties were primarily to UK and US
businesses outside the Group, with limited net outflow. Net cash used in
investing activities was EUR (29.3) million in the Period.
The Group’s cash flows from financing activities mainly reflect proceeds that
were received from borrowings, the repayment of principal and interest on
indebtedness, and the payment of dividends. The issuance of 2018 Notes in March
and September accounted for most of the loans received and notes issued in the
Period.
RECENT DEVELOPMENTS
Recent developments include significant and material information about the
Group’s development and any changes since its last quarterly report that was
published on 5 November 2015.
New licenses and establishments
The Group started lending in Mexico in November 2015 using the Vivus brand.
4finance, S.A. de C.V., SOFOM E.N.R. is licensed as a non-banking financial
company by the National Financial Services Consumer Protection Commission.
In January, the Group re-started its lending operations in Lithuania using UAB
Credit Service, a licensed entity previously owned by 4finance Group S.A. that
has been transfered to 4finance Holding S.A.. This entity will be added as a
guarantor to the 2019 Notes and 2018 Notes in due course.
The Group has incorporated companies in the Dominican Republic and Brazil to
support pre-opening activities ahead of intended launches in those countries.
The Group has a 15% interest in a UK company, v7 Limited, that received full FCA
authorisation to operate as an online consumer lender in the UK on 4 February
2016 and has started lending
atwww.vivus.co.uk (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F
%
2Fwww.vivus.co.uk&esheet=51290089&newsitemid=0&lan=en
-US&anchor=www.vivus.co.uk&index=3&md5=12e8e099c64f05b9f96770e418815727).
Litigations and contingent liabilities
No member of the Group is engaged in new legal or arbitration proceedings which
may have a material effect on the Group’s financial position or profitability.
Changes in management
In February 2016, Clemens Baader was appointed to the new role of Chief
Analytics Officer. Prior to joining 4finance, Clemens was the head of analytics,
financial services at AlixPartners, a global management consulting firm. Before
that Clemens worked for 10 years as financial derivatives trader for Goldman
Sachs, Morgan Stanley and Deutsche Bank, in London and New York. Clemens was
educated in Germany, Spain and Scotland, and holds an MSc in Data Science, and a
BA in Business Administration.
Changes in the regulatory framework
The regulatory changes described in previous reports have now been implemented
in Latvia (from 1 January 2016) and Lithuania (from 1 February 2016) and the
Group's products are fully compliant with these new regulations. Regulatory
changes in Poland take effect from 11 March 2016 and the Group is finalising its
new product offering for that market.
Changes in the corporate structure
In February 2016, two Luxembourg based category A directors were appointed to
the Group's board, Stéphane Sabella and Philip Cesar Pascual, to replace
directors Marc Chong Kan and Livio Gambardella.
Corporate
website: www.4finance.com (http://cts.businesswire.com/ct/CT?id=smartlink&url=ht
t
p%3A%2F%2Fwww.4finance.com&esheet=51290089&newsitemid=0&lan=en
-US&anchor=www.4finance.com&index=4&md5=8c619246e123759c5f990da6d46e0be3)
4finance Holding S.A.
Address: 6, rue Guillaume Schneider, L-2522, Luxembourg
4finance Holding S.A.
investorrelations@4finance.com
www.4finance.com (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%
2
Fwww.4finance.com&esheet=51290089&lan=en
-US&anchor=www.4finance.com&index=5&md5=1a2a13fef16afdb39f75bf8a60e5992d)
4finance Reports Preliminary Results for the Twelve Month Period Ending 31 December 2015
| Source: 4finance S.A.
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