UAB

NEO Finance

Board report 2017Q3

Vilnius

2017-10-05

Press releases

2

IQ magazine: P2P lending – a

trustworthy way to invest

NEO Finance attracted new

shareholdersRead more

29/08/2017

Event for VIP investors

06/09/2017

Training session for beginners in P2P lending

19/09/2017

Training session for experts in P2P lending

27/09/2017

Special event with debt collection company

Social events

Comment on NEO Finance provision

fundRead more

Material events

3

Bank of Lithuania confirmed that

Provision fund service is legal;

New shareholders: Andrius Liukaitis,

UAB Arikesa and UAB Elijos miestas;

Agreements for Payment Initiation

Service (PIS) with UAB “Legal Balance”

and “Tiketa” were signed. A new source

of revenue from PIS service;

Capital stock raised to 1 771 127 EUR,

total amount invested in company‘s

capital exceeds 2.35M;

Bank of Lithuania inspectation results:

significant compliance breaches were

not identified; no penalty imposed.

P2P consumer loan market in Lithuania

4

During 2017 Q3 P2P consumer loan market size reached 4.54 million EUR. Compared to 2016 Q3

year on year the issued loans volume grew by 110% from 2.16 million EUR. “Paskolų klubas”

market share during 2017 Q3 reached 53% with 2.4 million EUR of loans issued.

Monthly amount of issued consumer loans through all Lithuanian platforms reached a peak of 1.57

million EUR in September, with a record of 0.86 million EUR financed through “Paskolų klubas”.

Compared to the same month in 2016, “Paskolų klubas” issued loans volume grew by 227%.

0.320.41

0.490.55 0.59

0.67

0.520.60

0.75 0.740.80

0.860.890.99

1.11

1.27 1.26

1.39

1.08

1.28

1.45 1.42

1.54 1.57

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

October November December January February March April May June July August September

P2P consumer loan market, loans issued, million EUR

Paskolų klubas Market size

Investors

5

In 2017 Q3 investors‘ trust, stable returns and

transparent communication attracted 586 new

registered investors to a total of 5 102.

Compared to 2016 Q3, the number of

registered investors grew by 132%.

Investors have already earned 683 thousand EUR in returns.

3076

3909

4516

5102

0

1000

2000

3000

4000

5000

6000

2016 Q4 2017 Q1 2017 Q2 2017 Q3

Registered investors

1589

2070

2573

2981

0

500

1000

1500

2000

2500

3000

3500

2016 Q4 2017 Q1 2017 Q2 2017 Q3

Active investors

In 2017 Q3 the number of active investors grew

by 408. At the end of 2017 Q3 the number of

active investors reached a total of 2 981.

Compared to 2016 Q3, the number of active

investors grew by 182%.

Borrowers

6

19541

25201

28925

32451

0

5000

10000

15000

20000

25000

30000

35000

2016 Q4 2017 Q1 2017 Q2 2017 Q3

Registered borrowers

1051

1668

2249

2856

0

500

1000

1500

2000

2500

3000

2016 Q4 2017 Q1 2017 Q2 2017 Q3

Active borrowers

In 2017 Q3 low fees and brand growth attracted

3 526 new registered borrowers. At the end

of 2017 Q3 the number of registered borrowers

grew to a total of 32 451. Compared to 2016

Q3, the number of registered borrowers grew

by 124%.

In 2017 Q3 the number of active borrowers

grew by 607 users. At the end of 2017 Q3 the

number of active borrowers reached a total of 2

856. Compared to 2016 Q3, the number of

active borrowers grew by 382%.

Revenues

7

UAB Neo Finance earns

income from three revenue

streams:

• Revenues related to P2P lending

• Revenues related to the issuance

and processing of electronic money

• Investment income

It should be noted that the vast majority of revenues related to P2P lending activities

are distributed throughout the loan period, and this income is obtained only by actual

repayment of the monthly instalment of the consumer credit recipient. The company

chose this type of income collection due to the requirement of the Law on Consumer

Credit and because it has the maximum interest itself not only in origination of the loan,

but also in the return of the principal and interest to investors. When an enterprise

collects a brokerage fee in this way, the company's income in the financial accounting

is deferred to future periods, therefore the company's income calculation procedure

differs significantly from other market participants and therefore is not comparable. It

needs to be emphasized that during the inspection of the company, the Bank of

Lithuania noted that such method of collecting revenue is the only way in full

compliance with the requirements of legal acts.

44,709

60,774

78,447 93,043 986

1,920

2,118

2,192

(3,142)

13,328

20,066

29,649

42,553

76,022

100,631

124,884

(20,000)

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2016 Q4 2017 Q1 2017 Q2 2017 Q3

Income

P2P income Electronic money income Investment income

2017 Q3 2017 Q2 ∆, % 2016 Q3 ∆, %

Income 124,884 100,631 24% 29,171 328%

P2P income 93,043 78,447 19% 26,693 249%

Electronic money income

2,192 2,118 3% 226 870%

Investment income

29,649 20,066 48% 2,252 1217%

Overdue loans

8

At the end of 2017 Q3 out of 3708 issued loans - 225 loans, or 6.07%, were overdue for

more than 90 consecutive days. Respectively, out of 8.64 million EUR financed – 512

thousand EUR or 5.92% were overdue more than 90 days.

2.19%

5.50%

10.09%

5.92%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

A rating B rating C rating Total

EUR, overdue >90 days, %.

Provision fund

9

“Paskolų klubas“ offers a „Provision Fund"

service, which allows investors to reduce their

investment risk. If a loan defaults – “Paskolų

klubas“ guarantees to repay the investor with

all of the assets. During 2017 Q3 the service

covered 51 846 EUR.

For liquidity risk management, “Paskolų klubas“ calculates the sufficiency of

funds to cover liabilities under “Provision fund“ and holds these funds in a

separate bank account. The purpose of this account is to ensure the company's

internal cash flow management. In order to fulfill its obligations to investors, the

company may, if necessary, use other assets of the company.

During 2017 Q3 the surplus of 11 299 EUR was withdrawn from the “Provision

Fund“ account. Despite the withdraw, the fund's growth amounted to 21 626

EUR. At the end of 2017 Q3 there were 138 867 EUR of accumulated funds,

and the total guaranteed volume was 1 158 759 EUR, resulting in 12% coverage

ratio.

8696 97

106 107117 122 125

139

0

20

40

60

80

100

120

140

160

Provision fund, K EUR

572642

743797

859939

10001051

1159

0

200

400

600

800

1000

1200

1400

Guaranteed volume, K EUR

Buybacks

10

“Paskolų klubas“ offers a buyback service. When an agreement with a borrower is terminated, investors have

an option to sell their investment for 50-80% of it‘s face value to “Paskolų klubas“. In 2017 Q3 investors sold

806 investments for 12 444 EUR.

2,795 €

5,593 €

10,755 €

12,444 €

122

425

565

806

0

100

200

300

400

500

600

700

800

900

0 €

2,000 €

4,000 €

6,000 €

8,000 €

10,000 €

12,000 €

14,000 €

2016 Q4 2017 Q1 2017 Q2 2017 Q3

Buybacks

Buybacks, EUR Buybacks, units

Secondary market

11

Secondary market is a feature where investors can sell or buy investments. It allows investors to adjust their

risk exposure in pursuit of aggressive returns, or sell a nonperforming investment. It also provides liquidity

when an investor feels the need to cash out. During 2017 Q3 secondary market turnover reached 68 206

EUR. Average transaction was 17.48 EUR.

31,666 €38,401 €

52,975 €

68,206 €

1391

1712

2681

3901

0

500

1000

1500

2000

2500

3000

3500

4000

4500

0 €

10,000 €

20,000 €

30,000 €

40,000 €

50,000 €

60,000 €

70,000 €

80,000 €

2016 Q4 2017 Q1 2017 Q2 2017 Q3

Secondary market

Turnover, EUR Turnover, units

12

Main statisticsSince launch till the end of 2017

Q3

2981Active investors

2,895 €Average amount

invested

682,738 €Interest received

8,644,054 €Issued loans

Investments sold in

secondary market

200,431 € 6,922,235 €Outstanding principal