Eleving Group reports audited results for twelve months ended 31 December 2023

Eleving Group
Annual Financial Report

Eleving Group reports audited results for twelve months ended 31 December 2023

Operational and Strategic Highlights

• Eleving Group closed 2023 with the best-ever business performance. Revenues, including fee and commission income, for the corresponding period reached EUR 189.3 mln, recording an increase of EUR 13.7 mln, compared to 2022. Meanwhile, the net portfolio grew by EUR 27.3 mln and landed at EUR 320.3 mln.
• Diversified business operations and a balanced revenue stream from all core business lines:

• Flexible lease and subscription-based products contributed EUR 50.4 mln to the 2023 revenues-a decrease of 2%, mainly due to the sale of the Renti Plus portfolio and the slightly decreasing Kenya motorcycle taxi loan portfolio (effect from unfavorable foreign currency rate development).
• Traditional lease and leaseback products contributed EUR 66.2 mln to the revenue stream, up by 7% compared to the respective period a year ago. The recorded increase can be explained by a steady and controlled portfolio and interest income growth across most of the Group's markets, with the highest growth rates recorded in Romania, Lithuania, and Moldova.
• Revenues from the consumer loan segment contributed EUR 72.7 mln to the 2023 revenues-a significant leap of over 20%. The strong results were driven by the efficient integration of the Sub-Saharan consumer financing business and outstanding performance in the Group's European consumer markets.

In early Q3, Eleving Group integrated the ExpressCredit consumer financing business in four Sub-Saharan region countries. As a result, Botswana, Namibia, Zambia, and Lesotho joined the Group's portfolio.In July, Renti Plus business operations in Latvia were sold to Transporent Ltd, a Latvian subsidiary of the international mobility services provider SIXT. The respective transaction included the sale of more than 100 vehicles from the Renti Plus fleet and its active customer portfolio.In Q4, the Group issued EUR 50 mln of senior secured and guaranteed Eleving Group 2023/2028 bonds. As a result, over 2,000 new investors from the Baltic states and Europe were onboarded, and the debt maturity profile was significantly improved. Shortly after, Fitch Ratings assigned a rating of 'B-' with a Recovery Rating of 'RR4' to the respective bonds.In mid-Q4, the Group launched a new initiative in Kenya- retrofitting internal combustion engine motorcycles to electric. The main objective of this product is to intensify the introduction of sustainable mobility in Kenya and to give a second life to used motorcycles, thereby extending their life cycle. By the end of the year, Mogo Kenya had already retrofitted several motorcycles, and a healthy spike in demand is expected in 2024.As part of its foreign currency exchange risk management strategy during Q4, the Group established cooperation with MFX Currency Risk Solutions (USA) and Absa Bank (Uganda). As a result, in January 2024, the Group companies entered in currency hedging contracts to fully cover the Group's exposure with respect to the Ugandan shilling.In the sustainable mobility area, Eleving Group continued to roll out its electric car-sharing service in Latvia and electric motorcycle financing in Kenya. In 2023, over 3.2 mln kilometers were commuted on pure electricity by the Group's clients. Therefore, both green mobility services have reduced the potential CO2 emissions by approximately 300 to 315t, compared to the amount an internal combustion engine would have generated.An important milestone in digitization was reached by launching an advanced online client cabinet for the Romanian market. The project will ensure active onboarding of existing clients and 24/7 account access; it will provide real-time information on agreements, customer information, payment history, and plans. On top of that, it provides numerous payment methods that focus on promoting recurring (subscription) payments. It is planned to implement the respective project gradually across other Group markets.In January 2024, the Group received all the necessary approvals from Belarussian government authorities with respect to the Mogo Belarus sale. The sale is expected to be finished within 2024 once all aspects of the transaction, including asset refinance, will be implemented. For reporting purposes, Mogo Belarus is classified as a discontinued operation (also in comparatives).

Financial Highlights and Progress

• Solid profitability evidenced by strongest-ever business financials:

• Adjusted EBITDA of EUR 77.5 mln (2022: EUR 65.6 mln).
• Adjusted Net Profit before FX of EUR 29.5 mln (2022: EUR 22.8 mln).
• Adjusted Net Profit after FX of EUR 23.1 mln (2022: EUR 15.4 mln).
• Increased net portfolio of EUR 320.3 mln; Eleving Vehicle Finance and Eleving Consumer Finance accounted for EUR 215.4 mln and EUR 104.9 mln, respectively.
• 2023 ended with a healthy financial position, supported by the capitalization ratio of 26.1% (31 December 2022: 25.6%), ICR ratio of 2.3 (31 December 2022: 2.4), and net leverage of 3.7 (31 December 2022: 3.8), providing an adequate and stable headroom for Eurobond covenants.

In 2023, Eleving Group raised USD 7 mln from the Verdant Capital Hybrid Fund for the Kenyan portfolio growth.In mid-2023, Fitch Ratings affirmed Eleving Group's long-term Issuer Default Rating (IDR) and Senior Secured Debt Rating (SDRR) at 'B-,' with a stable outlook.During Q4, Eleving Group continued diversifying its funding structure by entering into talks with ACP Credit. In early 2024, it resulted in EUR 10 mln attracted for business development in Romania.In the meantime, the Group has continued the private placement of Kenyan notes with an aggregate size of up to EUR 23 mln. As of the end of 2023, EUR 13 mln has been raised in total.The Group continues to explore numerous local funding channels to raise funds in local currencies to mitigate future adverse foreign currency exchange impacts. The groundwork has been laid for several collaborations with investment funds and banks, the results of which will be reported over the coming year.

Modestas Sudnius, the CEO of the Eleving Group, comments:

"Entering this year, it was clear that high inflation rates and the growing cost of borrowing would challenge overall client payment behavior. Also, Eleving Group had a significant debt of its own, which had to be managed in the best possible way. And finally, we had a goal to increase our efficiency and profitability as an organization further.

In retrospect, I can tell that we had set highly ambitious goals, and I am delighted that we managed to achieve most of them and beyond. We have had a stable year with increasing portfolio quality. In the second part of the year, we laid the foundation for further growth in 2024 through the integration of consumer finance businesses in the South African region, seizing new opportunities in our existing markets, and securing future financing by issuing EUR 50 mln worth of new bonds.

Despite the prevailing uncertainty in the global economy, the demand for consumer credit products did not weaken, and the people's ability to pay was still higher than expected despite the surging interest rates and inflation.

In the vehicle financing segment, after a slightly slower start, we gathered momentum in the second half of the year. This was anticipated as people temporarily postponed large purchases. In the meantime, the unsecured consumer finance business grew steadily throughout the year, benefiting from the weakening competition and utilizing previously established business essentials-a vast sales network through online and offline channels and well-calibrated customer scoring models.

We have successfully addressed the diversification of our funding structure by unlocking numerous additional financing channels like local impact funds, bank loans, local notes, and, of course, the latest bond issue that attracted EUR 50 mln and improved our debt maturity profile. Also, we continue to maintain lean operations and strong cost discipline. Together with the increasing digitization of our daily processes, we have managed to maintain a very cost-effective business despite the inflationary environment.

In recent years, we have primarily focused on organic expansion in our core business lines. Yet, the integration of the ExpressCredit business will allow us to expand while still maintaining a strong position in our existing markets. We are open to exploring further growth opportunities through new market launches or acquisitions. However, it will not happen at the expense of the profit, and this would become a priority in case of additional equity injection in the business. We will continue to actively participate in the capital markets and explore all the opportunities they offer. Having a well-diversified debt stack in place with no significant maturities upcoming in 2024, our focus will be on potential equity raising, exploring opportunities both in the Baltic markets and outside, not ruling out an IPO.

In the meantime, the Group strengthened its position in green mobility by rapidly expanding its electric car-sharing service in Latvia and the electric motorcycle financing service in Kenya. The Group's customers covered over 3.2 mln kilometers using electricity-powered vehicles, thus reducing over 300tCO2 compared to what traditional vehicles would have produced. In 2023, more profoundly than before, we saw that people paid much more attention to the so-called value-for-money criteria. This translated into more sustainable decisions, i.e., a greater demand for green mobility solutions that are more climate-friendly and economical in the medium- to long-term. This trend is likely to continue next year, so we expect good results from our sustainable mobility products."

Maris Kreics, the CFO of Eleving Group, comments:

"Despite the challenging year of peak interest rates and inflation, Eleving Group achieved strong results in all key financial indicators. The Group's adjusted EBITDA increased to EUR 77.5 mln, or by over 18%, compared to 2022, while the total revenue, including fee and commission income, reached EUR 189.3 mln, showing an increase of close to 8%. The adjusted net profit before FX landed at EUR 29.5 mln, up by 29%, while the net portfolio reached EUR 320.3 mln.

It was a year in which we made a solid effort to increase our efficiency and improve our cost of risk. Compared to last year, the Group also achieved higher relative profitability, allowing it to absorb any foreign currency exchange rate fluctuations successfully. With local funding and hedging solutions in place, Eleving Group is expected to have a limited negative impact on foreign currency exchange rates in the coming years. We also strengthened the Group's capitalization ratio while maintaining sustainable dividend payout levels.

During 2023, we continued to diversify our funding structure by raising USD 7 mln from the Verdant Capital Hybrid Fund for the Kenyan portfolio growth. In addition, we successfully continued our Kenyan note program, through which we raised more than EUR 13 mln for business development. Furthermore, in 2023, we established the cooperation with ACP Credit, Central Europe's leading provider of financing solutions for middle-market businesses. As a result, in early 2024, Mogo Romania received an investment of EUR 10 mln, making it the first time in the Group's history that a significant external funding partner outside the Mintos marketplace was brought to Mogo Romania. In addition, we continued to develop our electric car-sharing service, OX Drive, by raising EUR 2.8 million from Industra Bank to expand its car fleet.

Of course, one of the highlights of the year was the issuance of the latest Eurobond and subsequent listing on the Baltic and Frankfurt stock exchanges, resulting in EUR 50 mln raised and over 2,000 new investors onboarded. The bond issue was mainly tailored towards the existing investors (both retail and professional ones) from the Baltic states. In terms of volume, this was one of the largest corporate issuances in the Baltics in recent years. Retail investors from Estonia were particularly active. Therefore, we can assume that companies with a strong track record and a healthy balance sheet still have support from local retail investors even in volatile market conditions characterized by an ambiguous investment landscape.

Furthermore, I would like to note that Fitch Ratings affirmed Eleving Group's long-term Issuer Default Rating (IDR) and Senior Secured Debt Rating (SDRR) at 'B-,' with a stable outlook. Despite the global economic challenges, we have maintained this performance for the fourth consecutive year.

In conclusion, it was a successful year for the company, with healthy growth, sound decisions that delivered expected results, and a strong financial position that will contribute to the future sustainable development of our global business."

Full audited report on the 12M ended 31 December: https://eleving.com/investors

Investor relations

Edgars Rauza, Investor Relations Manager, [email protected]

About Eleving Group

Eleving Group has driven innovation in financial technology around the world since its foundation in Latvia in 2012. As of today, the group operates in 16 markets and 3 continents, encouraging financial inclusion and upward social mobility in underserved communities around the globe. Eleving Group has developed a multi-brand portfolio for its vehicle and consumer finance business lines, with around 2/3 of the portfolio comprising secured vehicle loans and mobility products, with Mogo as the leading brand, and around 1/3 of the portfolio including unsecured consumer finance products, with Kredo and Tigo as the segment's flagship brands. Currently, 57% of the group's portfolio is located in Europe, 30% in Africa, and 13% in the rest of the world.

The Group's historical customer base exceeds 500,000 customers worldwide, while the total volume of loans issued goes beyond EUR 1.6 billion. With headquarters in Latvia, Lithuania, and Estonia and a governance structure in Luxembourg, the Group ensures efficient and transparent business management, powered at the operational level by 2760 employees. For two consecutive years, the Group was listed among Europe's 1000 fastest-growing companies published by the Financial Times in 2020 and 2021.

The group closed 2023 with strong financial results-its adjusted EBITDA stood at EUR 77.5 million, revenue at EUR 189.9 million, and adjusted net profit after FX at EUR 23.1 million. Eleving Group's net portfolio reached EUR 320.3 million. In 2023, Fitch, a leading credit rating agency, affirmed Eleving Group's B- rating with a stable outlook.

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Attachments:
Eleving Group Integrated Annual Report 2023_ESEF.zip
Eleving Group Integrated Annual Report 2023.pdf
Eleving Group SA Standalone Annual Report 2023.pdf

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