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Ferratum Oyj: Ferratum Group reports good operational progress in third quarter of 2018
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DGAP-News: Ferratum Oyj / Schlagwort(e): 9-Monatszahlen
Ferratum Oyj: Ferratum Group reports good operational progress in third
quarter of 2018
15.11.2018 / 07:30
Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich.
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Nine Months Report January - September 2018
Ferratum Group reports good operational progress in third quarter of 2018
Helsinki, 15 November 2018 - Ferratum Oyj (ISIN: FI4000106299, WKN: A1W9NS)
("Ferratum" or the "Group") announces preliminary unaudited results for the
9 months ended 30 September 2018 ("9M 2018").
9M 2018 highlights
- Group revenue of EUR 190.2 million - up 18.1% year-on-year
- Operating profit (EBIT) of EUR 26.8 million - up 12.7% year-on-year
- EBIT margin of 14.1%
- Profit before tax (EBT) of EUR 15.1 million - down 14% due to unfavourable
currency fluctuations
- Basic EPS decreased by 13.0% to EUR 0.60 per share
- Diluted EPS decreased by 14.5% to EUR 0.59 per share
- Balance sheet strengthened by successful placement of EUR 100 million
bonds by Ferratum Capital Germany GmbH
- Net book value of loan portfolio grew by 19.0% to EUR 306.3 million (9M
2017: EUR 257.4 million)
- Deposits from customers increased by 10.3% to EUR 192.3 million
- Active customers increased 7.4% to 799,111
Key Figures
9 months
ended 30
September
EUR '000 2018 2017 %
chan-
ge
Revenue 190,194 161,006 +18.-
1%
Operating profit (EBIT) 26,833 23,810 +12.-
7%
Profit before tax 15,110 17,575 -14.-
0%
Profit before tax % 7.9% 10.9% -27.-
2%
Net cash flows from operating activities 94,458 75,579 +24.-
before movements in portfolio and deposits 7%
received
Net cash flows from operating activities (18,982) 14,691 n/a
Net cash flows from investing activities (10,284) (6,862) +49.-
9%
Net cash flows from financing activities 56,023 34,617 +61.-
8%
Net increase/decrease in cash and cash 26,757 43,928 -37.-
equivalents 0%
Earnings per share, basic (EUR) 0.60 0.69 -13.-
0%
Earnings per share, diluted (EUR) 0.59 0.69 -14.-
5%
EUR '000 30 September 31 December %
2018 2017 change
Accounts receivable - consumer 306,314 257,406 +19.0%
loans (net)
Deposits from customers 192,291 174,301 +10.3%
Cash and cash equivalents 159,409 131,832 +20.9%
Total assets 517,386 436,595 +18.5%
Non-current liabilities 137,613 64,167 +114.5-
%
Current liabilities 271,835 267,185 +1.7%
Equity 107,937 105,243 +2.6%
Equity ratio % 20.9 24.1
Net debt to equity ratio 2.03 1.90
Financial and segmental performance
Ferratum Group delivered further growth in the first nine months of 2018,
building on the record performance of 2017, and has made progress with
implementing the management actions announced in the half year results, to
restore revenue growth and improve Group performance.
Operating profit (EBIT) for the first nine months of 2018 increased by 12.7%
year-on-year to EUR 26.8 million. The gross impairment on loans ratio
improved to 33.6% for the first nine months of 2018, compared to 35% for the
comparable 2017 period.
In view of heightened revenues of EUR 190.2 million compared to EUR 161.0
million (+18.1%) the EBIT margin slightly decreased from 14.8% to 14.1%
within the nine- month period. Due to increases in finance costs of EUR 5.5
million to EUR 11.8 million within the nine-month period the profit before
tax (EBT) reduced to EUR 15.1 million from EUR 17.6 million.
Group revenues increased by 18.1% to EUR 190.2 million, with Ferratum's
premium, higher value products such as Credit Limit and PlusLoan together
representing 74.8% of this result, a marginal increase on the comparable
period in 2017. Microloan revenues of EUR 31.5 million continued to
represent a diminishing proportion of turnover, being 3.6% lower than
Microloan revenue for the first nine months of 2017. The ongoing decline is
reflective of the Group's successful strategy of positioning Microloan as an
initial 'beachhead' to understand customer behaviour while prioritising
longer term lending as Ferratum's brand becomes more established in each
country.
Business lending to Small-Medium Enterprises (SMEs) is becoming an
increasingly material customer segment for the Group, generating EUR 15.5
million of revenue in the first nine months, a 73% increase on SME revenues
for the first nine months in 2017.
In Q2 the Board of Ferratum acknowledged that recent changes to the Group's
credit scoring processes were having a counterproductive impact on loan
approval rates, and on 27 June 2018 the Board announced that Ferratum would
be revising its risk assessment criteria to ensure that the Group does not
reject credit risks that have in the past proven to be acceptable.
The objective is to ensure that Ferratum's automated credit assessment
procedures remain tailored to the specific customer payment behaviour and
hence risk tolerances that Ferratum has observed for each country of
operation in order to restore the overall track record of growth that
Ferratum has historically achieved across all geographies of operation.
As the table of quarterly product revenues below illustrates, despite the
temporary impact on revenues of lower loan approval rates - especially in
the PlusLoan segment - the quarter-on-quarter picture indicates that Credit
Limit and PlusLoan remain stable, core drivers for growth in line with
Ferratum's product growth strategy.
Revenues per product per quarter
EUR '000
Fiscal Microlo- PlusLo- Credit SME Mobile Bank / Total
quarter an an Limit Other
Q1 2016 13,426 5,458 13,823 476 30 33,213
Q2 2016 13,567 7,405 15,348 837 57 37,215
Q3 2016 11,942 7,913 17,010 1,227 126 38,218
Q4 2016 13,901 9,456 20,264 1,710 152 45,483
Q1 2017 13,975 11,294 22,329 2,390 21 50,009
Q2 2017 8,020 17,152 25,391 3,127 32 53,722
Q3 2017 10,729 15,456 27,574 3,483 33 57,276
Q4 2017 11,162 16,413 28,480 4,134 444 60,632
Q1 2018 11,058 15,852 28,901 5,508 123 61,442
Q2 2018 10,110 16,326 31,139 4,937 277 62,789
Q3 2918 10,370 15,579 34,479 5,095 430 65,953
While Credit Limit revenue growth improved in Q2 and in Q3 2018, and is now
back to the growth levels of 2017, revenue growth for the PlusLoan segment
indicates improving payment behaviour but has yet to fully recover in loan
approval rates. Remedial action on PlusLoan approval rates remains a
priority for management.
Recent country launches in SME business lending (mainly UK and Australia)
have required corrective action on credit scoring in Q2 2018 due to
suboptimal payment behaviour, but underlying SME lending growth across
markets overall remains strong and is expected to continue its rapid growth
path.
As previously communicated, the Group expects only modest contributions from
the Mobile Bank and Partnerships for the time being, while Ferratum
continues to develop its suite of Mobile Bank services.
The current pilot project in partnership with Thomas Cook Money is ongoing
in Sweden until the end of February 2019, when we will evaluate the
prospects for the pilot project and decide on next steps.
Operational developments
As announced at 27 June 2018, the Group is taking remedial action to ensure
that the Group's automated credit assessment processes do not reject credit
risks that have in the past proven to be acceptable. These measures are
being rolled out and tailored to address the specific customer behaviour and
risk profiles across all countries of operation and are expected to be
completed by the end of 2018. Furthermore, Ferratum has taken a number of
additional management actions to improve performance, including the
strengthening of top management, staff streamlining, the rebalancing of
resources to prioritise enhanced risk management and automation of lending
processes in existing markets, and a review of the Groups performace across
all geographies.
The new, enlarged Leadership Team was announced 19 September 2018 with a
significant strengthening, promoting eight members into senior leadership
positions in addition to the six existing members. Effective 12 September
2018, the new members of the Leadership Team are: Adam Tonning, Head of
Financial Planning & Analysis; Outi Ellilä, Head of Marketing and Customer
Experience; Scott Donnelly, Business Unit Director SME Lending; Kristjan
Kajakas, Business Unit Director for Revolving Loans; Antti Kumpulainen,
Business Unit Director for Instalment Loans; Marius Solescu, Head of Human
Resources; Sami Kalliola, Head of Strategic Partnerships; and Emmi Kyykkä
Deputy Head of Investor Relations.
In addition, Dr. Clemens Krause, Chief Financial Officer, took on new
responsibilities as Chief Risk Officer. He will continue serving as CFO
until a new CFO has been appointed and shift his focus to the risk function.
He continues to serve on the Directors Team along with the existing members
Jorma Jokela, Founder and Chief Executive Officer of the Group; Lea Liigus,
Head of Legal and Compliance; Ari Tiukkanen, Chief Operating Officer; Saku
Timonen, Chief Commercial Officer and Jussi Mekkonen, Chief Executive
Officer of Ferratum Bank p.l.c.
As part of the management actions announced with the H1 results to increase
cost efficiency and streamline staffing, the overall headcount in the Group
has been reduced by 5%. The biggest movements in personnel have been a 13%
decrease in customer service and back office staff due to increase in
automation in loan handling and pay-outs, while maintaining portfolio and
service quality. A 9% increase in the personnel of the risk function and Dr
Clemens Krause taking over the lead of the function supports the planned
rebalancing and ensuring increased focus to be put on risk. A 68% decrease
in country related, local organizations was enabled by the central functions
taking over tasks that previously were handled locally. The Group is
targeting to reduce its headcount to 900 in Q4 2018 and for the newly
optimized cost structure, including staff costs to be during place in Q1
2019.
The Group has further centralized its operations in order to improve cost
efficiency. Customer service operations for 21 countries and the collection
operations for 18 countries have been centralized.
A new management model within Ferratum, the so called "five cylinder model",
has been fully implemented. The cylinders are lead generation, conversion
funnel, underwriting & collections, CRM and product & pricing. The model is
enabled by the centralization of functions and ensures stronger internal
controls over each part of the lending process due to designated teams and
accountabilities for each cylinder with clear KPIs, which are being
monitored on a daily basis.
The Group is conducting a thorough performance review of all geographies,
which will last until the end of the year 2018, with the possibility of
withdrawing from 1-2 countries, should it not see sufficient growth
potential for the future or see that a higher level of profitability can be
achieved by reallocating resources to other operations of the Group.
Since end of June 2018, there have been the following developments in the
product segments. Microloan was discontinued in Canada and Sweden. This was
a decision in line with Group strategy to decrease Microloan's presence, as
higher customer lifetime value (CLV) can be achieved with other products.
PlusLoan is now being offered in 10 countries with Canada the latest launch
in July 2018. Primeloan was successfully launched in Germany in October,
becoming the second country with this product.
The current Mobile Bank app has received some operational performance
updates, which improve the usage and reduce loading times. Furthermore,
Ferratum Bank is focused on the development of a new, enhanced Mobile Bank
app, which is expected to go live in H1 2019.
Financial position
Due to the adoption of the new IFRS 9 accounting standard - with effect from
1 January 2018, the risk provisions of the Group had to be increased by EUR
9.2 million from this effective date. This one-time increase of the risk
provision reduced the equity of the Group by EUR 7.5 million as the
increased risk provisions were partially offset by deferred tax assets of
EUR 1.7 million. The adjustment was booked directly to the Group's equity
and did not affect the reported profit for nine months 2018. Overall, Group
equity increased marginally to EUR 107.9 million as at 30 September 2018
from EUR 105.2 million as of 31 December 2017.
The net debt to equity ratio remains strong at 2.32 and comfortably below
the limit of 3 as required by Ferratum's bond covenants.
The profit before tax (EBT) declined by 14.0% y-o-y to EUR 15.1 million,
mainly as a result of unfavourable foreign exchange movements during the
first nine months of 2018 attributable to the weakening of the Swedish Krona
and the Polish Zloty, as illustrated in the table below, and increased
finance costs of an additional EUR 3.2 million in the period compared to the
prior year.
EUR '000 Q1 2018 Q2 2018 Q3 2018 YTD 2018 Q1-Q3 2017
AUD -193 45 -48 -196 -237
CZK 49 -381 138 -194 523
PLN -284 -964 156 -1,092 -183
GBP 131 -80 -149 -98 -92
SEK -900 -271 366 -805 -111
Other currencies 43 46 -112 -23 -9
FX impact on P&L -1,154 -1,605 351 -2,408 -109
The Group has substantial credit portfolios. Due to increasing foreign
exchange volatility, Ferratum increased it hedging levels in Q3 - while
recording a currency gain in Q3 of EUR 351,000 - and intends is to further
increase the proportion of its currency exposure that is hedged.
Net receivables from customers grew by 19.0% to EUR 306.3 million from EUR
257.4 million. Deposits from customers increased by 10.3% to EUR 192.3
million vs EUR 174.3 million as at 31 December 2017. The current deposit
volume exceeds the requirements for 2018.
Subsequent Events
On 22 October 2018 Ferratum Capital Germany GmbH, a wholly owned subsidiary
of Ferratum, announced that the EUR 20 million of senior unsecured bonds due
October 2018 with ISIN: DE000A2GS104 and the EUR 25 million senior unsecured
bonds due October 2018 with ISIN: DE000A1X3VZ3 have been repaid with
proceeds from the EUR 100 million of senior unsecured bonds that Ferratum
Capital Germany GmbH successfully placed in May 2018. The EUR 100 million of
senior unsecured bonds have a coupon of 3 months Euribor plus 5.50 per cent
p.a. and a tenor of four years and are listed on Nasdaq Stockholm with ISIN:
SE0011167972. This EUR 100 million bond was admitted to the Prime Standard
segment of the Frankfurt Stock Exchange on 9 November 2018 and has a tap
option which allows Ferratum to increase the volume by an additional EUR 50
million.
In October a new milestone with IT development was reached, with the launch
of a new IT platform. The first country on the new platform is New Zealand.
The new platform is more automated, enables faster changes to products and
scorecards, and accelerated launches in new markets, due to modular,
scalable technology. The architecture also further supports future
partnerships through flexible API connections. The new platform will be
rolled out to all Ferratum markets over the medium-term and we expect a
gradual decline in IT maintenance costs as a result.
2018 Outlook
With product revenues during the fourth quarter continuing to develop in
line with third quarter performance, the Board expects that the Group will
achieve the lower end of previously published revenue guidance for fiscal
year 2018.
Accordingly, the Board now estimates revenues for the fiscal year 2018 will
range between EUR 260 million and EUR 265 million (previously EUR 260
million to EUR 280 million), while the estimate for operating profit margin
(EBIT margin) is reconfirmed within the range of 13% 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 operate in 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's 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. Ferratum has approximately 1.9 million active and former customers
who have an account or have been granted one or more loans in the past (as
at 30 September 2018), of which over 799,000 customers have an open Mobile
Bank account or an active loan balance in the last 12 months.
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 Dr. Clemens Krause Chief Ferratum Group Emmi Kyykkä
Financial Officer T: + 49 30 921005844 Deputy Head of Investor
E: [1]clemens.krause@ferratum.com 1. Relations T: +41 79 940
mailto:clemens.krause@ferratum.com 6315 E:
[1]emmi.kyykka@ferratum.com
1.
mailto:emmi.kyykka@ferra
tum.com
UK / European media enquiries:
Smithfield, A Daniel J Edelman Company
Alex Simmons | Brett Jacobs T: +44 20
3047 2543 | +44 20 3047 2537 E:
[1]asimmons@smithfieldgroup.com E:
[2]bjacobs@smithfieldgroup.com 1.
mailto:asimmons@smithfieldgroup.com 2.
mailto:bjacobs@smithfieldgroup.com
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15.11.2018 Veröffentlichung einer Corporate News/Finanznachricht,
übermittelt durch DGAP - ein Service der EQS Group AG.
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Sprache: Deutsch
Unternehmen: Ferratum Oyj
Ratamestarinkatu 11 A
00520 Helsinki
Finnland
Telefon: +49 (0) 30 9210058-44
Fax: +49 (0)30 9210058-49
E-Mail: ir@ferratum.com
Internet: https://www.ferratumgroup.com
ISIN: FI4000106299
WKN: A1W9NS
Börsen: Regulierter Markt in Frankfurt (Prime Standard);
Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover,
München, Stuttgart, Tradegate Exchange
Ende der Mitteilung DGAP News-Service
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Ferratum Oyj: Ferratum Group reports good operational progress in third quarter of 2018
Am 15. November 2018 um 07:31 Uhr
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