Sustained growth while maintaining exceptional profitability

CORRECTION: correction of a typo on page 4 in CEO’s position, and minor changes on page 6 in section “Outlook - Products & Strategy”.

Operational and Strategic Highlights

• Exceptional six-month EBITDA—EUR 32.3 mln.
• Amid its 10th anniversary, the Group continues to demonstrate robust financial performance and deliver on its previously approved strategy as revenues have hit an all-time six-month high and the net portfolio has seen 6.0% q-o-q growth, totaling EUR 275.8 mln.
• Continued diversification of business operations and a balanced revenue stream from all three core business lines:
  • Flexible lease and subscription-based products contributed EUR 23.5 mln to 6M 2022 revenues—up by 142.3% compared to 6M 2021 and up by 23.8% q-o-q. The key revenue drivers were strong performance in productive lending in the motorcycle-taxi segment in East Africa and a successful scale-up of rental and subscription-based products in the Baltics;
  • Traditional lease and leaseback products contributed EUR 31.5 mln to 6M 2022 revenues—up by 30.7% compared to 6M 2021 and up by 5.9% q-o-q. Quarterly revenue growth mainly stemmed from incremental portfolio growth in nearly all of the Group’s markets;
  • Revenues from the consumer loan segment contributed EUR 31.0 mln to 6M 2022 revenues—up by 8.8% compared to 6M 2021, but a 25.8% decrease q-o-q. The negative trend in consumer loan revenues was mainly driven by the run-down of the Ukrainian portfolio.
• Eleving Group has taken another important step towards becoming a significant player in the mobility market by co-launching OX Drive, an electrical car-sharing product in Latvia. The OX Drive mobile app was launched in June 2022 and its fleet comprised 43 Tesla Model 3 vehicles. The company plans to increase the fleet to around 100 cars by the end of the year. Within the first weeks of operations, OX Drive achieved close to 10k app downloads with an exceptional utilization ratio.
• During Q2, Eleving Group has continued its path towards a more sustainable future and has achieved several milestones in line with its ESG strategic objectives:
  • Eleving Group has received a Carbon Neutral Company Certificate by participating in emissions offsetting projects in Kenya and Uganda. In Kenya—co-financing the reforestation of the Great Rift Valley; in Uganda—co-financing the purchase of effective household cookstoves in the Up Energy Improved Cookstoves program;
  • Eleving Group has joined the Zero Tolerance Against Corruption initiative organized by Transparency International Latvia and CSR Latvia.

Financial Highlights and Progress

• Solid profitability as evidenced by:
  • EBITDA of EUR 32.3 mln (6M 2021: EUR 27.7 mln);
  • Net Profit before FX of EUR 9.0 mln (6M 2021: EUR 5.5 mln);
  • Net Profit after FX of EUR 7.4 mln (6M 2021: EUR 5.6 mln).
• Record-high net portfolio of EUR 275.8 mln, EUR 15.7 mln increase q-o-q; Eleving Vehicle Finance and Eleving Consumer Finance accounted for EUR 215.9 mln and EUR 59.9 mln, respectively.
• The Group has successfully continued to decrease its relative operational cost base as evidenced by the 4.1 p.p. drop in the cost-to-income ratio (excl. impairment expense) in 6M 2022 compared to 6M 2021. Moreover, facing an inflationary environment, the Group will look to become even more cost-efficient moving forward. 
• Fitch Ratings has affirmed our long-term Issuer Default Rating (IDR) and senior secured debt rating to “B-”. The outlook on the long-term IDR is Stable.
• Sufficient capitalization as capitalization ratio stood at 23.0% (31 December 2021: 20.7%), providing an adequate and stable headroom for Eurobond covenants.

Modestas Sudnius, CEO of Eleving Group, commented: 

While there is a lot of uncertainty in the world and capital markets, Eleving Group continues to demonstrate stable performance. The Group’s portfolio and revenue continued to grow in the first half of this year while the company carried on executing its strategy. That has produced strong financial results with the best 6M profitability.

Keeping that in mind, we are cautious about various signals of an economic slowdown initiated by the geopolitical and economic situation in Europe, such as inflation, rising costs of energy resources, and the overall sentiment in the economy.

In the upcoming six months, Eleving group will maintain its growth and development strategy but will take a more conservative approach in its underwriting policies, will seek for further improvements in operational efficiency, and focus on existing products and geographies with cautious tests of new concepts.

Maris Kreics, CFO of Eleving Group, commented:

The first six months have further strengthened the company’s financial standing in the face of any potential external challenges; hence, considering all known unknowns, we are becoming more cautious in our decision-making, especially regarding our countries and product portfolio. 

As we have successfully raised the latest Eurobond (EUR 150 mln, listed in Frankfurt) in 2021 and refinanced our outstanding bond in Latvia (EUR 30 mln, listed in Baltics) during the same year, we have secured significantly more favorable funding conditions than those currently available in the capital markets. Additionally, our borrowings maturity profile has now been extended beyond next year, with Latvian unsecured bonds repayable in 2024 and Eurobonds repayable in 2026. Moreover, during the last days of 2021, we have also issued our inaugural subordinated bond in the total amount of EUR 25 mln maturing in 2031, which is currently listed on both Frankfurt’s and Baltic Stock Exchanges.

To better prepare the Group for any possible turbulences in the future, we are slightly adjusting our strategy—slowing down the pace of new products and market launches. Our primary focus lies on products with the best return characteristics. We believe that the efficiency of the portfolio and our operations in the following months will be crucial. 

Full unaudited consolidated report on 6M period ended on 30 June: https://eleving.com/investors/

Conference Call:

A conference call in English with the Group's management team to discuss the results is scheduled for 17 August 2022 at 15:00 CET.

Participant access information: https://bit.ly/3pclFac

Eleving Group

Toms Vecvagars, Investor Relations Manager

Email: toms.vecvagars@eleving.com

About Eleving Group

Eleving Group comprises a number of financial technology companies with a global presence. The Group operates in the vehicle and consumer finance segments on three continents, providing financial inclusion and disruptively changing financial services industries in its countries of operation. Founded in 2012 in Latvia, the Group has revolutionized how people purchase cars. Having expanded across the Baltics within its first year in business, the Group continued expanding in the following years, servicing 13 active markets.

With its headquarters in Latvia, the Group operates in the Baltics, Central, Eastern, and South-Eastern Europe, Caucasus, Central Asia, and Eastern Africa.

For two consecutive years since 2020, the Group has appeared on the Financial Times list of Europe’s 1000 fastest growing companies.

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