2017-11-16 07:30:00 CET
2017-11-16 07:30:23 CET
REGULATED INFORMATION
Ferratum Oyj - Interim report (Q1 and Q3)
FERRATUM OYJ: Nine Months Report January - September 2017: Ferratum Group reports strong revenue and profit growth; on track to achieve the upper end of full year 2017 revenue guidance
Nine Months Report January - September 2017
Ferratum Group reports strong revenue and profit growth; on track to achieve the
upper end of full year 2017 revenue guidance
Helsinki, 16 November 2017 - Ferratum Oyj (ISIN: FI4000106299, WKN: A1W9NS)
("Ferratum" or the "Group") announces preliminary unaudited results for the 9
months ended 30 September 2017 ("9M 2017").
Highlights
* Revenue of EUR 161.0 million - up 48.2% year-on-year
* Operating profit (EBIT) of EUR 23.8 million - up 67.3% year-on-year
* Improved EBIT margin of 14.8%
* Profit before tax (EBT) of EUR 17.6 million - up 85.9% year-on-year
* EPS (basic and diluted) increased 76.9% year-on-year to EUR 0.69 per share
* Net book value of loan portfolio up 32% over 9M 2017 to EUR 242.9 million
(31 December 2016: EUR 184.3 million)
* Loan coverage ratio remained stable at 25.3% (31 December 2016: 25.4%)
* Customer deposits increased by 50% over 9M 2017 to EUR 155.3 million (31
December 2016: EUR 101.4 million)
* Full year 2017 Group revenue now expected to be in the upper end of
previously published guidance
* Fiscal year 2017 guidance has today been narrowed to estimate that Group
revenue will range between EUR 215 and EUR 225 million. Operating
profitability margin (EBIT margin) for fiscal year 2017 is now expected to
range between 14% and 16%
Key Figures
+-----------------------+---------------------------+
| |9 months ended 30 September|
+-----------------------+-------+-------+-----------+
|EUR '000 | 2017 | 2016 | % change |
+-----------------------+-------+-------+-----------+
|Revenue |161,006|108,645| +48.2% |
+-----------------------+-------+-------+-----------+
|Operating profit (EBIT)| 23,810| 14,231| +67.3% |
+-----------------------+-------+-------+-----------+
|Profit before tax | 17,575| 9,456| +85.9% |
+-----------------------+-------+-------+-----------+
|Profit before tax % | 10.9%| 8.7%| +25.4% |
+-----------------------+-------+-------+-----------+
+--------------------------------------------------+---------------------------+
| |9 months ended 30 September|
+--------------------------------------------------+-------+-------+-----------+
|EUR '000 | 2017 | 2016 | % change |
+--------------------------------------------------+-------+-------+-----------+
|Net cash flows from operating activities before | 75,579| 40,242| |
|movements in portfolio and deposits received | | | |
+--------------------------------------------------+-------+-------+-----------+
|Net cash flows from operating activities | 14,691| 43,806| |
+--------------------------------------------------+-------+-------+-----------+
|Net cash flows from investing activities |(6,862)|(6,038)| |
+--------------------------------------------------+-------+-------+-----------+
|Net cash flows from financing activities | 34,617| 17,958| |
+--------------------------------------------------+-------+-------+-----------+
|Net increase/decrease in cash and cash equivalents| 42,446| 55,726| |
+--------------------------------------------------+-------+-------+-----------+
|Earnings per share, basic (EUR) | 0.69| 0.39| +76.9% |
+--------------------------------------------------+-------+-------+-----------+
|Earnings per share, diluted (EUR) | 0.69| 0.39| +76.9% |
+--------------------------------------------------+-------+-------+-----------+
+------------------------------------------+------------+-----------+--------+
|EUR '000 |30 Sept 2017|31 Dec 2016|% change|
+------------------------------------------+------------+-----------+--------+
|Accounts receivable - consumer loans (net)| 242,866| 184,346| +31.7%|
+------------------------------------------+------------+-----------+--------+
|Deposits from customers | 155,345| 101,436| +53.1%|
+------------------------------------------+------------+-----------+--------+
|Cash and cash equivalents | 116,198| 73,059| +59.0%|
+------------------------------------------+------------+-----------+--------+
|Total assets | 403,814| 295,683| +36.6%|
+------------------------------------------+------------+-----------+--------+
|Non-current liabilities | 108,728| 72,246| +50.5%|
+------------------------------------------+------------+-----------+--------+
|Current liabilities | 194,564| 135,563| +43.5%|
+------------------------------------------+------------+-----------+--------+
|Equity | 100,522| 87,875| +14.4%|
+------------------------------------------+------------+-----------+--------+
|Equity ratio % | 24.9| 29.7| |
+------------------------------------------+------------+-----------+--------+
|Net debt to equity ratio | 1.86| 1.53| |
+------------------------------------------+------------+-----------+--------+
Key Developments and Progress
Ferratum continues to make excellent progress and has delivered another quarter
of record revenues. Group revenue of EUR 57.3 million in the third quarter was
6.7% ahead of Q2 2017 and means that in just nine months, the Group has
generated revenues of EUR 161.0 million, an increase of 48.2% year-on-year and
4.5% ahead of total Group revenue for the full year 2016. Ferratum's premium,
higher margin products such as PlusLoan and Credit Limit now represent almost
three quarters of total Group revenue for 9M 2017, while Ferratum's business
lending to SMEs over the same period accounts for a further EUR 9 million, or
5.6% of Group revenue. As expected, Microloan continues to decline as a
proportion of total Group revenue, although the EUR 32.7 million generated in
9M 2017 (20.3% of Group revenue) is only marginally lower than the 21.2% of
total Group revenue attributable to Microloan for the first six months of 2017.
While Microloan remains a valuable lower risk tactical asset to help Ferratum
understand customer behaviour and needs in new markets, the core growth products
of Ferratum's digital lending activities - PlusLoan, Credit Limit and SME
business lending - are now firmly established as the core drivers of Group
revenue.
Operating expenses of EUR 81.1 million for 9M 2017 grew by 36.8% year-on-year,
less than Group revenue growth, and illustrative of the positive impact of the
Group's enhanced efficiency initiatives of the past 12 months. Changes to the
acquisition and upsell strategy for customers continued to have impact on on
credit losses and marketing cost. While credit losses as a proportion of revenue
increased slightly over the period (9M 2017: 35.0% of Group revenue vs.
9M 2016: 32.4%, ie. up by 2.6%), savings from changes to the acquisition and
upsell strategy for customers continued to have a positive impact in reducing
marketing costs as a proportion of revenues (9M 2017: 15.5% of Group revenue vs.
9M 2016: 19.3%, ie. down by 3.8%). As a result, the Group delivered strong
operating profit (EBIT) of EUR 23.8 million for 9M 2017, a 67.3% increase year-
on-year.
The total finance result continues to benefit from deposit taking, i.e. a higher
share of refinancing with low or non interest bearing deposit products. This
resulted in profit before tax (EBT) for 9M 2017 of EUR 17.6 million, an 85.9%
year-on-year increase and thus growing faster than the operating profit (EBIT).
Product and Country Launches
2017 has been another busy year for new products and country launches, and the
Group also achieved another milestone in its geographic expansion shortly after
the 9M period end with the launch of Microloan in the African continent. The
launch, through a strategic partnership with Interswitch in Nigeria, is
described in more detail in the section entitled Subsequent Events.
As disclosed in the Group's results for the first six months of 2017, Ferratum
has continued to diversify the size and duration of its loan products to cater
for customers with longer term financial objectives. The launch of 'Primeloan'
in Finland not only offers significantly larger sums of up to EUR 20,000 for
longer terms of up to 10 years, but the product tests a new risk model which
links pricing to the risk profile of the customer, tailoring the loan terms more
closely to the customer's circumstances and purpose of the loan.
Also in May, Ferratum entered the consumer lending market in Brazil,
establishing a subsidiary in São Paulo, which will initially focus on Credit
Limit, offering flexible credit facilities in sums up to BRL 3,000 (EUR 850).
Ferratum Business was introduced in the UK in June. Ferratum Business provides
fast, easy working capital loans of up to £50,000 to small and medium sized
enterprises ("SMEs") in the UK for periods of between 6 and 12 months.
Also in June, the Mobile Bank was launched in France and Spain, two of Europe's
largest retail banking markets. The introduction of Ferratum's Mobile Bank in
these two important markets brings the total number of countries where the
Mobile Bank is currently available to five, following its launch in Germany,
Sweden and Norway in 2016. As at 30 September 2017, customer deposits were
EUR 155.3 million. On 1 September, Ferratum announced the appointment of Jussi
Mekkonen as the new Chief Exective Officer of Ferratum Bank p.l.c. Mr Mekkonen
assumed his responsibilities on 1 November 2017 and will play a key role in
accelerating the roll-out of the Mobile Bank across further markets in Europe.
Operational Developments
Twelve months ago, Ferratum commenced an important series of initiatives to
ensure that the Group's management structure, IT infrastructure, customer
systems and processes would remain resilient and scalable as Ferratum continues
to grow.
The centralization programme covers both mobile banking and digital lending
customer services and collections The centralization initiatives have resulted
in increased staff cost in 2017 but are intended to to deliver a range of group-
wide cost and efficiency benefits from 2018 on, such as the streamlining of
resources, harmonization and standardization of processes, adoption of common
key performance indicators across regions and cost reductions that avoid the
duplication of country practices.
Having centralized the customer services, marketing, back office and collection
functions of 14 countries into the Group's Malta operations in the first half of
2017, two more countries followed in the third quarter. The centralization
programme is expected to be completed by mid-2018.
Treasury Update
Net receivables from customers have grown by 31.7% over the first nine months of
2017 to EUR 242.9 million, from EUR 184.3 million at the end of 2016. The
impaired loan coverage ratio has remained stable at 25.3%, reflecting a
decreasing share of non-performing loans and an improving portfolio quality.
Ferratum ended the nine months reporting period with a significantly stronger
cash position of EUR 116.2 million (31 December 2016: EUR 73.1 million). The
increased figure inlcudes some extra liquiy from the positive deposit growth in
Ferratum Bank p.l.c. . The excess liquidity will be used in 2018 for the
incerasing lending volumes in Ferratum Bank p.l.c. resulting from both organic
growth and the migration of additional countries to operate under the bank.
During the first half of 2017, the EUR 20 million bond for Ferratum Bank p.l.c.
was repaid with proceeds from the EUR 25 million senior unsecured bonds due
March 2020 [WKN: A189MG] issued in December 2016. In June 2017 Ferratum Bank
p.l.c. successfully concluded a tap issue of EUR 15 million of the same bonds
[WKN: A189MG] within the facility of an existing EUR 60 million bond issuance
programme.
In July 2017, Ferratum Capital Germany GmbH, a subsidiary of Ferratum Oyj,
issued a EUR 20 million senior unsecured bond due October 2018 [WKN: A2GS10],
following a successful private placement with institutional investors in Germany
and Poland. The bond has a coupon of 4 per cent per annum and is listed on the
Frankfurt Stock Exchange (Open Market).
By offering deposit products in Sweden, Norway, France, Germany and Spain,
Ferratum is diversifying its funding base. Over the first nine months of 2017
customer deposits volume have increased by 50% to EUR 155.3 million (31 December
2016: EUR 101.4 million). Besides the strong cash position, the Group had unused
credit lines amounting to EUR 15 million as at 30 September 2017.
Ferratum's group rating of BBB+ was confirmed by Creditreform Rating AG during
March 2017 in its regular annual review. Bonds issued in 2013 by Ferratum
Capital Germany GmbH are rated BBB+.
The BBB+ rating of the bearer bond [WKN: A1X3VZ] issued by Ferratum capital
Germnay GmbH was also confirmed by Creditreform Rating AG in September 2017.
Subsequent Events
On 6 October 2017, Ferratum announced the launch of Microloan in Nigeria in
partnership with Interswitch Limited. Interswitch, based in Lagos, builds and
manages transaction infrastructure and provides secure electronic payment
solutions. All Nigerian banks are connected to Interswitch, making the company
the most accessible e-payment network in Nigeria.
Interswitch has launched a new lending services platform in partnership with
five leading banks and three innovative credit providers, including Ferratum.
Ferratum will initially offer Microloan amounts of between NGN 1,000 and NGN
10,000 (approximately EUR 2.70 to EUR 27.00) to customers of Interswitch who are
resident in Lagos.
Outlook and fiscal year 2017 guidance
In view of the Group's record financial performance and strong operational
progress over the past three quarters, the Board of Directors of Ferratum is
confident that the Group will now achieve the upper end of previously published
revenue guidance for fiscal year 2017. Accordingly, the Board now expects
Group revenue for fiscal year 2017 to range between EUR 215 million and EUR 225
million, and the Group operating profitability margin (EBIT margin) to range
between 14% and 16%.
About Ferratum Group:
Ferratum Group is an international provider of mobile banking and digital
consumer and small business loans, distributed and managed by mobile devices.
Founded in 2005 and headquartered in Helsinki, Finland, Ferratum has expanded
rapidly to 25 countries across Europe, Africa, South and North America and the
Asia-Pacific region.
As a pioneer in digital and mobile financial services technology, Ferratum is at
the forefront of the digital banking revolution. Ferratum Mobile Bank, launched
in 2016, is an innovative mobile banking platform offering a range of banking
services, including real time digital payments and transfers, within a single
app. It is currently available in five European markets. Led by its founder,
Jorma Jokela, Ferratum has approximately 1.8 million active and former customers
who have been granted one or more loans in the past (as at 30 September 2017).
Ferratum Group is listed on the Prime Standard of Frankfurt Stock Exchange under
symbol 'FRU.' For more information, visit www.ferratumgroup.com.
Contacts:
Ferratum Group European media enquiries:
Dr. Clemens Krause, CFO Edelman.ergo, A Daniel J Edelman Company
T: +358 40 7248247 Alexander Schmidt | Andreas Martin
F: +358 20 741 1614 T: +49 69 27 13 89 26
E: clemens.krause@ferratum.com E: Alexander.Schmidt@edelmanergo.com
E: Andreas.Martin@edelmanergo.com
Ferratum Group UK media enquiries:
Paul Wasastjerna Smithfield, A Daniel J Edelman Company
Head of Investor Relations Alex Simmons | Brett Jacobs
T: +358 40 7248247 T: +44 20 7903 0669 | +44 20 7903 0675
F: +358 20 741 1614 E: asimmons@smithfieldgroup.com
E: paul.wasastjerna@ferratum.com E: bjacobs@smithfieldgroup.com
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