sia twino · sia twino interim separate financial statements for the period from august 5, 2015 to...

SIA TWINO

Interim separate financial statements

for the period from August 5, 2015 to April 30, 2016,

Prepared in accordance with

International Financial Reporting Standards

as adopted by the European Union

and Independent Auditors` Report*

* This version of interim separate financial statements is a translation from the original, which was prepared in the

Latvian language. All possible care has been taken to ensure that the translation is an accurate representation of

the original. However, in all matters of interpretation of information, the original language version of interim

separate financial statements takes precedence over this translation.

SIA TWINO

Interim separate financial statements for the period from

August 5, 2015 to April 30, 2016

2

Table of contents Page

General Information 3

Management Report 4-5

Statement of Management`s Responsibility 6

Independent Auditors` Report 7

Interim Statement of Comprehensive Income 8

Interim Statement of Financial Position 9

Interim Statement of Cash Flows 10

Interim Statement of Changes in Equity 11

Notes to the Financial Statements 12-25

SIA TWINO



3

General information

Name of the Company TWINO

Legal status of the Company Limited liability company

Registration number, place and date 40103919184

Riga, August 5, 2015

Registered address 41 Mukusalas street

Riga, Latvia, LV-1004

Shareholder Armands Broks, 100% (from 12.10.2016)

SIA Finabay, 100% (from 05.08.2015 to 12.10.2016)

Members of the board Armands Broks, chairman of the Board from 12.10.2016

Jevgeņijs Kazaņins, member of the Board from 02.11.2015

Elīna Puļķe, chairman of the Board from 04.04.2016 to 11.10.2016

Līga Trūpa, member of the Board from 05.08.2015 to 01.11.2015

Reporting period August 5, 2015 – April 30, 2016

Auditors Deloitte Audits Latvia SIA

License No. 43

4a Gredu street

Riga, LV-1019,

Latvia

Kitija Ķepīte

Certified auditor

Certificate No. 182

SIA TWINO



4

Management report

The Board of SIA Twino (hereinafter – the Company) has prepared report on the interim separate financial

statement for the period beginning with the foundation of the Company on August 5, 2015 and ending on April

30, 2016.

The accompanying financial statements are presented in the euro (€) currency.

Main operating activities

The main responsibility of the Group`s unsecured loan issuer companies is to ensure continuous issue of loans to

provide the Group with a revenue flow (commissions, interest, extension fees, penalties and other payments from

borrowers for the use of loan). The Company's primary function is to provide the Group`s unsecured loan issuer

companies with funding for business growth - the Company acts as a fundraising center by means of selling

assignment rights for unsecured consumer loans via twino.eu online platform. The Group loan issuer companies

assign consumer loans issued to individuals to the Company to provide the Company with assets that are required

in order to attract funds. The Company offers independent third-party individuals and legal entities the opportunity

to purchase partial assignment rights to those individuals` consumer loans, ensuring that funds will be available

for future development of the Group`s business and issuance of new loans.

The Company has signed four long-term cooperation agreements for unsecured consumer loan assignment with

the Group companies in Latvia, Georgia, Poland and Denmark. Due to uncertainties in the Latvian legislation and

taking into consideration precautionary principle, a loan agreement assignment from the Group’s company in

Latvia to the Company was suspended on 1 November 2015.

Taking into account that the Company does not issue loans itself and that the fund attracting activities are

performed through sales of the loan assignment rights, the Group`s of unsecured consumer loan providers in

Georgia, Poland and Denmark carry out regular loan assignments to the Company in order to offer those rights to

third parties through the online platform twino.eu. Thus, by means of loan assignments, the Company as an

assignee acquires a assignment rights in relation to the debtors (borrowers) in the amount of loan principal, loan

interest, fees and fines, as well as other payments associated with the acquired claim rights. The customers of

twino.eu online platform are offered the opportunity to purchase full claim rights in relation to individual

borrower`s loan principal amount, and a partial assignment rights for the loan interest, commission fees and

penalties, as well as other payments associated with the assignment rights acquired from the Company.

In line with the main objective of the Company's business model, which is fundraising, the Company has no reason

to possess doubtful receivables portfolio, because doubtful loans are not the interest subjects of the Company's

customers` (buyers of loan assignment rights). According to the contractual obligations, if the borrower – private

individual delays the loan repayment for more than 30 days (depending on the parties' agreement), the Company

decides on the sale of the assignment rights to third parties or to loan issuer companies within the Group. Following

the repurchase transaction, the Group loan issuer companies start doubtful debt collection process.

Financial review

The Company's performance during the reporting period is evaluated as successful. The net profit amounted to

5’247’554 EUR after tax.

During the reporting period, the Company's gross financial income amounted to 15'898'097 EUR, 51% of which

consisted of revenue obtained from consumer loans issued in Georgia, 47% - from consumer loans issued in

Poland, 1% - from consumer loans issued in Latvia and 1% - from consumer loans issued in Denmark.

The Company's total operating expenses during the reporting period amounted to 10’045’878 EUR, 47% of which

were financial expenses, 35% - loss on impairment of receivables from customers and 18% - administrative

expenses.

During the reporting period, the Company's loan claim rights trading activities attracted funds in the amount of

EUR 7'482'281, while total amount of the loan principal sold through twino.eu platform during the reporting period

amounted to EUR 20'156'878.

SIA TWINO



5

Management report (continued)

On April 30, 2016 the portfolio of customer loans that was obtained as the result of assignment amounted to

19'117'582 EUR. On April 30, 2016, provisions for the impairment of the loan portfolio amounted to 5.5% of the

total portfolio amount.

In future the Company plans to continue the expansion of the geographical presence and stabilization of position

in existing markets, as well as research on new products and launch of new business. During the year 2015, the

Company supported the foundation called "Mission Possible", which works on enhancing the quality of

education in Latvia. Another objective of the Company`s public support policies is aimed to support new talent

and entrepreneurs. Therefore, at the beginning of 2016 the Company launched the new talent support program,

by means of which the Company provides support to young talent to broaden their vision through their

participation in various international events related to the industry.

Financial statement approval date is 4 November 2016.

Management report was signed on 4 November 2016 on behalf of the Company by:

SIA TWINO

Interim financial statements for the period from


6

Statement of Management`s Responsibility

The Company`s Board is responsible for preparation of interim separate financial statements for the period from

August 5, 2015 to April 30, 2016.

Financial statements are prepared based on supporting documents and present fairly the Company’s financial

situation, operating results and cash flows during the reporting period, ended on April 30, 2016.

The Board of the Company confirms that appropriate accounting policies have been consequently applied and

prudent and reasonable judgments and estimates have been made by the Board in the preparation of the interim

separate financial statements for the period from August 5, 2015 to April 30, 2016, set out on pages 8 to 25. The

Board also confirms that International Financial Reporting Standards (IFRS) as adopted by the EU have been

applied and complied with, that financial statements have been prepared on a going concern basis.

The Board of the Company is responsible for the maintenance of proper accounting records, the safeguarding of

the Company’s assets and the prevention and detection of fraud and other irregularities in the Company. The Board

of the Company is also responsible for operating the Company in compliance with all the applicable laws and

other legislative or regulatory provisions of Republic of Latvia, as well as with the national laws and regulations

of the countries in which the Company and its subsidiaries conducts their business.

On behalf of the Board:

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SIA TWINO



8

Interim Statement of Comprehensive Income

Notes

05.08.2015 –

30.04.2016

EUR

Financial income 4 15 898 097

Financial expenses 5 (4 726 772)

Net financial income 11 171 325

Impairment loss on receivables from customers 6 (3 563 271)

Administrative expenses 7 (1 755 835)

Net foreign exchange gain 180 907

Other income 8 109 041

Profit before corporate income tax 6 142 167

Corporate income tax 12a (894 613)

Profit for the reporting period 5 247 554

Other comprehensive income for the reporting period -

Total comprehensive income for the reporting period 5 247 554

The accompanying notes on pages 12 to 25 are an integral part of these financial statements.

These financial statements were signed on 4 November 2016 on behalf of the Company by:

SIA TWINO



9

Interim Statement of Financial Position

Assets

Notes 30.04.2016

EUR

Cash and cash equivalents 47 976

Receivables from customers 11 19 117 582

Intangible assets 9 210 756

Fixed assets 9 118 229

Investments in subsidiaries 10 89 951

Deferred tax asset 12b 157 456

Receivables from and loans to related parties 19 8 235 431

Other assets 13 205 773

Total assets

28 183 154

Liabilities and equity

Payables for assignement rights 15 6 583 385

Payables to related parties 16, 19 14 759 511

Corporate income tax liabilities 12a 1 052 069

Other payables 17 537 835

Total liabilities 22 932 800

Share capital 14 2 800

Profit for the reporting period 5 247 554

Total equity 5 250 354

Total liabilities and equity 28 183 154



SIA TWINO



10

Interim Statement of Cash Flows

05.08.2015 –

30.04.2016

Notes EUR

Cash flows from operating activities


Amortization and depreciation 9 21 550

Calculated interest income from loans issued to related companies (143 370)

Premium to assignment transaction parties 5 293 108

Net foreign exchange gain (180 907)

Provisions for the impairment of receivables from customers 6 1 106 151

Increase of cash and cash equivalents from operating activities before

changes in assets and liabilities 7 238 699

Receivables from customers 11 (20 223 733)

Receivables from related parties 19 (5 528 668)

Other assets 13 (205 773)

Increase in payables to related parties 16,19 14 759 511

Increase in other liabilities 17 537 835

Deacrease in cash and cash equivalents from operating activities

before corporate income tax (3 422 129)

Corporate income tax paid -

Net cash and cash equivalents from operating activities (3 422 129)

Cash flows from investing activities

Purchase of equipment and intangible assets 9 (350 535)

Investments in subsidiaries 10 (89 951)

Loans issued to related parties (3 544 992)

Loan repayments received from related parties 981 600

Net cash flows from investing activities (3 003 878)

Cash flows from financing activities

Received from assignment transaction parties 7 482 280

Paid to assignment transaction parties (1 192 004)

Shares issued 2 800

Cash and cash equivalents from financing activities 6 293 076

Net foreign exchange gain 180 907

Net cash flows for the reporting period 47 976

Cash and cash equivalents at the beginning of the reporting period -

Cash and cash equivalents at the end of the reporting period 47 976



SIA TWINO



11

Interim Statement of Changes in Equity

Share capital

EUR

Retained earnings

EUR

Total equity

EUR

As of August 5, 2015 - - -

Paid in share capital 2 800 - 2 800

Profit for the reporting period - 5 247 554 5 247 554

As of April 30, 2016 2 800 5 247 554 5 250 354



SIA TWINO



12

Notes to the Financial Statements

1. General information

Information about the Company

Limited liability company Twino (further – “The Company”) is registered in the Republic of Latvia in August 5,

2015. The Company`s registration number in Latvian Register of Enterprises is 40103919184. The Company`s

legal and business address is 41 Mukusalas street, Riga, LV-1004, Latvia.

General information

The Company is a part of the group of related companies (hereinafter – the Group), in which other companies are

engaged in issuing of unsecured consumer loans in different countries. The Company does not issue loans, its

primary function is to ensure continuous sufficiency of funds required for business development by trading

unsecured consumer loan claim rights using www.twino.eu online platform.

The Company has entered into four long-term cooperation agreements on unsecured consumer loan assignment

with Group companies in Latvia, Georgia, Poland and Denmark. Due to uncertainties in the Latvian legislation

and taking into consideration precautionary principle, a loan agreement assignment from the Group’s company in

Latvia to the Company was suspended starting from November 1, 2015.

2. Summary of significant accounting principles

Basis of financial statements preparation

The accompanying financial statements are presented in the euro (€) currency.

These are interim separate financial statements of the Company for period starting on August 5, 2015 and ending

on April 30, 2016. Consolidated financial statements covering this period are not prepared, due to the fact that

assets, liabilities and income and expense items of the Company's subsidiaries are considered to be insignificant

as of April 30, 2016, thus the financial statements meet the consolidated financial statements (if it would be

prepared) in all material aspects. Those are the first financial statements the Company has prepared since its

incorporation on August 5, 2015.

These interim financial statements represent the general purpose financial statements of the Company. The interim

financial statements were prepared for the reporting period from August 5, 2015 to April 30, 2016 in compliance

with the International Financial Reporting Standards (IFRS) and International Accounting Standard 34 “Interim

Financial Reporting”, as adopted by the European Union. There is no significant difference between IFRS adopted

by EU and IFRS that have been issued by the International Accounting Standards Board (IASB), and are in force

at the time of preparation of the financial statements. These interim financial statements are prepared for general

information and not for any specific purpose, user or transaction. Accordingly, users should not rely exclusively

on these interim financial statements and should undertake other appropriate inquiries before making decisions.

Interim separate financial statements have been prepared based on historical cost principle. Other financial assets

and liabilities are carried at amortized cost using the effective interest rate method.

Interim statement of cash flows is prepared based on the indirect method.

Standards and amendments to the existing standards issued by IASB and adopted by the EU but not yet

effective

At the date of authorisation of these financial statements no standards and amendments to the existing standards

issued by IASB and adopted by the EU were in issue but not yet effective.

New standards and amendments to the existing standards that are issued by IASB but not yet adopted by

the EU

At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International

Accounting Standards Board (IASB) except for the following new standards and amendments to the existing

standards, which were not endorsed for use in EU:

IFRS 9 “Financial Instruments” (effective for annual periods beginning on or after 1 January 2018),

IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January

2016) - the European Commission has decided not to launch the endorsement process of this interim standard

and to wait for the final standard,

IFRS 15 “Revenue from Contracts with Customers” and further amendments (effective for annual

periods beginning on or after 1 January 2018),

IFRS 16 “Leases” (effective for annual periods beginning on or after 1 January 2019),

SIA TWINO



13

Notes to the Financial Statements (continued)

2. Summary of significant accounting principles (continued)

Amendments to IFRS 2 “Share-based Payment” - Classification and Measurement of Share-based Payment

Transactions (effective for annual periods beginning on or after 1 January 2018),

Amendments to IAS 7 “Statement of Cash Flows” - Disclosure Initiative (effective for annual periods

beginning on or after 1 January 2017),

Amendments to IFRS 4 “Insurance Contracts” - Applying IFRS 9 Financial Instruments with IFRS 4

Insurance Contracts (effective for annual periods beginning on or after 1 January 2018 or when IFRS 9

“Financial Instruments” is applied first time),

Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates

and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

and further amendments (effective date deferred indefinitely until the research project on the equity method

has been concluded),

Amendments to IAS 12 “Income Taxes” - Recognition of Deferred Tax Assets for Unrealised Losses

(effective for annual periods beginning on or after 1 January 2017).

The Company has not yet assessed the potential impact of these new standards and amendments to the existing

standards on the interim separate financial statements of the Company.

Significant accounting assumptions and estimates

IFRS adopted by the EU require that in preparing the financial statements the Company makes estimates and

assumptions that affect the reported amounts of assets and liabilities and the disclosure of off-balance sheet assets

and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the

reporting period. The Company`s management makes the estimates and assumptions concerning the Company’s

future. Actual results could differ from those estimates.

Estimates and assumptions are being constantly reviewed. Changes in accounting estimates are recognised in the

period in which estimates are reviewed if these changes only affect that period or in the period in which estimate

are reviewed and subsequent periods, if changes affect current and subsequent periods.

a) Receivables

Acquired client consumer loans are recognised in the balance sheet at amortized cost. Amortized cost of the loan

is the cost that is determined when the loan is issued, less repayments of the loan principal, plus or minus the

estimated amortization of the difference between the initial value and the value after moment of maturity (using

the effective interest rate method) minus partial write-off due to impairment.

b) Impairment of financial assets

At each reporting date, the Company performs an analysis of accounts receivable in order to assess whether it is

necessary and to what extent a provision for the impairment of assets needs to be established, to be reflected in the

statement of comprehensive income.

The core business purpose of the Company is to offer counterparties to purchase claim rights on loans that are

issued to solvent borrowers. The Company believes that if the borrower delays the repayment of the loan for more

than 30 days, the risk that the borrower will repay the loan only partially or not repay at all significantly increases.

For this reason, the Company repurchases from its counterparties the claim rights on loans with payments overdue

more than 30 days, thus fully compensating the counterparties risk of loss. Since more than 30 days due and

redeemed loans with an increased risk of insolvency are not considered as attractive business objects for further

trade on the twino.eu online platform, the Company in the interim reporting period sold back these claim rights on

loans to the related lending companies for prices at the level of the market value.

According to the market value price estimate, loans that are due more than 30 days are sold by applying discount

to the remaining principle amount. These types of transactions respectively cause loss to the Company. Taking

into consideration the available historical and current loan portfolio data in related lending companies, the

Company estimates the part of claim rights that is expected to exceed 30 days. In addition, the abovementioned

discount is taken into consideration in the calculation, resulting in the amount of provisions for the specific asset

impairment.

c) Intangible assets and fixed assets

The cost of a fixed asset is recognised as an asset if it is probable that future economic benefits associated with the

item will flow to the Company, and the cost of the item can be measured reliably. The cost of fixed asset comprises

the purchase price, transportation costs, installation, and other directly attributable expenses related to the

acquisition or implementation.

SIA TWINO



14



c) Intangible assets and fixed assets (continued)

Intangible assets are disclosed at cost less any subsequent accumulated amortization and accumulated impairment

losses. Amortization is calculated using straight-line method in order to write-off assets historical cost during the

useful life of an asset. Intangible assets are amortized over 4 to 5 years.

Fixed assets are stated at acquisition cost, less accumulated depreciation and accumulated impairment losses.

Intangible assets: Estimated useful life

Licences 5 years

Software 4 years

Fixed assets:

Furniture 5 years

Computers and office equipment 4 years

Other 4 years

d) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and balances on bank accounts.

e) Financial liabilities

Financial liabilities are measured based on amortized cost.

Financial liabilities are initially measured at fair value, less transaction costs.

Subsequently, financial liabilities are measured at amortized cost using the effective interest rate method.

Amortized cost is calculated by taking into consideration any discount and expenses, which is an integral part of

effective interest rate.

f) Disposal of financial assets and liabilities

Financial asset is disposed, when:

the rights to receive cash from the asset have expired; or

the Company has transferred its rights to receive cash from the asset or has undertaken an obligation to

make immediate transfer of the all cash received to a third party as per agreement of cession; and

either (a) the Company has transferred all significant risks and rewards of the assets to a third party, or

(b) the Company has neither transferred nor retained all the risks and rewards of the assets, but has

transferred control over the assets to a third party.

The Company excludes financial liabilities when the contractual obligations are settled, cancelled or expired.

g) Revenue and expense recognition

Interest income and expense are recognized on an accrual basis applying the effective interest rate.

Accrued interest income is recognized in the statement of comprehensive income if the Company does not have

objective evidence that these payments will not be received on due date.

Commissions received from customers are recognised in the statement of comprehensive income on an accrual

basis at the time when the service is provided or on the basis of certain important events.

Revenue from penalties is recognised on cash basis.

Revenue from insurance is recognised in the statement of comprehensive income on a straight-line basis over the

loan contract period.

Revenue and expenses relating to the reporting period are reflected in the statement of comprehensive income,

regardless of receipt or payment date.

SIA TWINO



15



h) Taxes

Corporate income tax for the reporting period is calculated in accordance with tax regulations of the Republic of

Latvia.

Deferred income tax is calculated for temporary differences caused by time deviations that arise from differences

between assets and liabilities in the financial statements and the amounts used for taxation purposes. The deferred

income tax assets and liabilities are determined on the basis of the tax rates that are expected to apply when the

temporary differences reverse. When the net deferred tax asset arises, it is reflected in the financial statements only

in those cases when its recovery is expected.

i) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past

event and it is probable that the Company will be required to settle the obligation and a reliable estimate can be

made of the amount of the obligation.

The recognised amount of provisions is based on the best possible assessment of the likelihood that the current

obligation will be settled, taking into account the risks and uncertainties relating to this obligation. In cases where

the amount of provisions is determined on the basis of the cash flows necessary to cover liability, net book value

for provisions is determined on the basis of expected cash flow present value.

j) Translation of foreign currencies:

i) Functional and reporting currency

Financial statements are prepared in euro (€), which is the Company’s functional and reporting currency.

ii) Transactions and balances

All transactions of the Company are translated into euro (€) at the European Central Bank (ECB) rate of exchange

prevailing on the transaction day. At the financial statements date, monetary assets and liabilities in foreign

currencies are translated at the European Central Bank rate of exchange prevailing on April 30, 2016. For those

foreign currencies for which ECB does not publish the euro (€) exchange rate, for transaction and monetary assets

and liabilities denomination are used each country’s Central bank defined euro exchange rate prevailing on the

transaction day.

April 30, 2016

1 EUR

Polish zloty (PLN) 4.39650

Georgian lari (GEL) 2.5330

Danish krone (DKK) 7.44400

British pound (GBP) 0.78025

The United States Dollars (USD) 1.14030

Kazakhstan tenge (KZT) 373.140

Russian ruble (RUB) 73.2286

k) Related parties

Related parties are defined as shareholder that may significantly affect the Company's operations, management

and the members of the Board, key management personnel, their close relatives, as well as companies that they

control.

SIA TWINO



16


3. Financial risk management

The Company is mainly exposed to the following risks: credit risk, country risk, liquidity risk and exchange rate

fluctuation risk. The Company individually and together with the Group companies manages credit risk by

developing a common risk management tools.

a) Credit risk

Credit risk is a risk that the Company will incur financial losses if the borrower for whose loan the Company has

purchased claim rights will not be able to comply with the obligations that are set in the agreement. Credit risk is

reduced in the following ways:

There are established lending procedures to ensure high-quality loan portfolio in each lending company

of the Group. The procedures are continually improved and they include the legal and behavioural

indicators, as well as the credit bureau data in order to reduce the loan principal if a potential customer

has doubtful creditworthiness.

Taking into account the fact that in the reporting period, the Company regularly sold back loans that were

30 days over due to lending companies, the Company takes the credit risk only for the period from the

moment of the claim right purchase till the 30th day of delay.

Provisions for doubtful loans that are over due 1-30 days is a sufficient way to mitigate the risk of losses.

Provisions for doubtful loans are based on experience of the Group lending companies and aggregated

statistics on the history of borrowers' loan repayment delays.

The table below shows the gross and net client debt portfolio of the Company that is obtained from assignement,

which is divided based on the maturity of the debt. Repayment date of loans is assumed to be final maturity date.

As of April 30, 2016 Days overdue Loans, EUR

Current and not impaired <=0 15 436 473

Overdue with impairment 1-30 4 787 260

Gross client portfolio: 20 223 733

Provisions for the impairment of loans (1 106 151)

Net debt portfolio 19 117 582

b) Country risk

Country risk is a risk that is associated with the operational changes at the national level and mainly includes risk

that is related to changes in legislation of each separate country. Country risk is being decreased by means of the

control performed by each separate country Group`s company management and regular assessment of situation

within each separate country.

The table below shows client loan portfolio divided by operating countries.

As of 30.04.2016

EUR %

Poland 9 132 294 47.8%

Georgia 9 736 428 50.9%

Latvia 186 767 1.0%

Denmark 62 093 0.3%

Total 19 117 582 100%

Currently Latvian peer-to-peer lending platform regulations and legislations are at development stage. The current

draft legislation stipulates that the Latvian market for this type of commercial activity will require a license in the

future. The Company and other Latvian peer-to-peer lending platform market participants are actively involved in

the development of regulating law concerning peer-to-peer lending industry. The content of the regulating law and

suggestions are being communicated with the Latvian Ministry of Finance. Therefore, it is not expected that the

new licensing rules may not be feasible for the Company or threaten the Company`s commercial operations and

going concern in any other way.

SIA TWINO



17


3. Financial risk management (continued)

c) Currency risk

Currency risk is a risk of the fluctuation in value of financial instruments, since the risk of fluctuations in foreign

exchange rate affect the Company's value of assets. The management of the Group has assumed that the exchange

rate in countries in which economics in their legislation is tied to EUR (Denmark) could fluctuate by 0-8%, while

the other currencies by the difference between the historical minimum and maximum rate of the previous year.

The table below lists the currencies the Company has used in the reporting period, the minimum and maximum

currency exchange rates, according to the maximum difference that each specific rate had in the reporting period.

In the reporting period

(currency/EUR) PLN DKK GEL

Reporting rate 4.3965 7.444 2.533

Maximum difference in the

reporting period 8.0% 0.3% 12.5%

Minimum value 4.1626 7.4411 2.4886

Maximum value 4.4943 7.4645 2.8003

Foreign exchange rate fluctuations affect value of the Company's assets and liabilities, as well as the profit and

loss result. During the reporting period in connection with assignement transactions, the Company had revenues,

assets and liabilities in EUR, PLN, GEL and DKK currencies. Operating expenses and liabilities against twino.eu

platform users were mainly in EUR and insignificant part in GBP. Revenue recognised in GEL currency accounted

for 50% of the reporting period total turnover, revenue recognised in PLN currency accounted for 47% of the

reporting period total turnover. During the reporting period the Company has gained a profit from exchange rate

fluctuations in the amount of EUR 180 907, the largest part of this amount consists of revaluation of balance sheet

positions to GEL currency. PLN / EUR exchange rate is considered as stable, because during the reporting period

fluctuation range was 8%. Other foreign currencies (GBP, USD) during the reporting period accounted for a non-

essential part of the total turnover (1%). Overall, the Company manages the currency risk by trying to keep balance

between revenues and costs in the same currency; foreign currency risk management (hedging) instruments

available in financial markets are not used.

The table below summarizes receivables and liabilities that are exposed to exchange rate fluctuations.

Currency EUR

GEL,

EUR

PLN,

EUR

DKK,

EUR

GBP,

EUR

Total,

EUR

Financial assets

Cash and cash equivalents 37 414 - - - 10 562 47 976

Receivables from

customers (gross) 199 912 10 271 525 9 685 105 67 191 - 20 223 733

Receivables from and

loans to related parties 3 053 601 2 479 434 2 692 747 9 649 - 8 235 431

Total financial assets 3 290 927 12 750 959 12 377 852 76 840 10 562 28 507 140

Financial liabilities

Payables for ceded claim

rights 6 355 255 - - - 228 130 6 583 385

Payables to related parties 3 999 906 4 767 913 5 954 954 36 738 - 14 759 511

Total financial liabilities 10 355 161 4 767 913 5 954 954 36 738 228 130 21 342 896

d) Liquidity risk

Liquidity risk is a risk that arises if the Company does not have sufficient resources in order to settle its obligations

with creditors as they fall due. From one side, liquidity risk is related to maintenance of sufficient capital volume

in the companies within the Group that would enable them to continuously issue loans to borrowers. From the

other side, liquidity risk is related to the ability to settle payments to counterparties arising from the purchased

claim rights.

In order to monitor the liquidity risk, the Company`s management closely follows the ratio of its assets and

liabilities against the counterparties.

SIA TWINO



18


3. Financial risk management (continued)

d) Liquidity risk (continued)

The table below shows information about the Company's liquidity - asset and liability maturity structure based on

contractual maturity terms.

On

demand

To 3

months

From 3

months to

1 year

From 1 till

5 years

No maturity

date Total

As of April 30, 2016 EUR EUR EUR EUR EUR EUR

Assets

Fixed and intangible assets - - - - 328 985 328 985

Investments in subsidiaries - - - - 89 951 89 951

Deferred tax asset - - - - 157 456 157 456

Receivables from customers - 15 826 424 1 943 805 1 347 353 - 19 117 582

Receivables from and loans to

related parties - 2 706 763 5 528 668 - - 8 235 431

Other assets - 123 090 82 683 - - 205 773

Cash and cash equivalents 47 976 - - - - 47 976

Total assets 47 976 18 656 277 7 555 156 1 347 353 576 392 28 183 154

Cumulative 47 976 18 704 253 26 259 409 27 606 762 28 183 154

Equity and liabilities

Share capital - - - - 2 800 2 800

Profit for the reporting period - - - - 5 247 554 5 247 554

Payables for assignment rights - 4 527 818 1 208 838 846 729 - 6 583 385

Payables to related parties - - 14 759 511 - - 14 759 511

Corporate income tax

liabilities - 1 052 069 - - - 1 052 069

Other payables - 537 835 - - - 537 835

Total equity and liabilities - 6 117 722 15 968 349 846 729 5 250 354 28 183 154

Cumulative 6 117 722 22 086 071 22 932 800 28 183 154

Net position 47 976 12 586 531 4 173 338 4 673 962

Analysing asset maturity structure shows that short-term assets exceed short-term liabilities (with maturity till 1

year) 1.2 times, accordingly the Company's liquidity situation is considered stable. More than 66% of total assets

or 18.7 million EUR consist of claims with a maturity of up to 3 months, which means that the Company's assets

in a relatively short period of time can be converted to cash, decreasing the level of the Company`s potential

liquidity risks. The assets with a maturity of up to 3 months are 3.1 times greater than the amount of liabilities in

respect of which payment must be made within 3 months, additionally showing the adequacy of liquidity.

The Company`s management monitors the daily situation in bank accounts and the daily cash withdrawal requests

from twino.eu platform accounts by assignment transaction parties. The cash reserve required to ensure the

continuous liquidity is estimated and maintained by the Company based on cash withdrawal requests and taking

into account the amount that is attracted from the assignment transaction parties each day.

The sole shareholder of the Company considers to use the retained earnings that were accumulated as the result of

The Company`s operations mostly for the further development of the Group. Consequently, substantial dividend

payments, which in turn would affect the liquidity situation, are not planned in the forseeable periods.

SIA TWINO



19


4. Financial income

05.08.2015 –

30.04.2016

EUR

Revenue from commissions 9 907 820

Revenue from interest 5 556 301

Penalty income 424 897

Insurance income 9 079

Total 15 898 097

5. Financial expenses

05.08.2015 –

30.04.2016

EUR

Assignment rights mark-up costs * 4 433 664

Premium to assignment transaction parties ** 293 108

Total 4 726 772

* Assignment rights mark-up costs are resulting from the difference between the purchased customer loan

portfolio`s amortized value and the purchase price, which is calculated taking into account the arm's length

principle. Those costs are recognized in the statement of comprehensive income in accordance with the effective

interest rate method, i.e., linearly based on repayment periods of the receivables from customers.

** Premium to assignment transaction parties is resulting from the difference between the price at which the

Company's assignment transaction parties acquire the loan claim rights and the value of the expected cash flow

from the acquired claim rights. It is recognized in the statement of comprehensive income, applying the accrual

basis.

6. Impairment loss on receivables from customers

05.08.2015 –

30.04.2016

EUR

Loss on sale of receivables from customers 2 457 120

Provisions for the impairment of receivables from customers 1 106 151

Total 3 563 271

7. Administrative expenses

05.08.2015 –

30.04.2016

EUR

Salaries 581 826

Marketing and advertising costs 398 412

IT costs 259 279

Professional service costs 170 738

Salary tax 106 385

Rent of premises and office maintenance expenses 94 115

Donations 52 000

Market research expenses 31 590

Depreciation and amortization 21 550

Other expenses 39 940

Total 1 755 835

SIA TWINO



20


8. Other income

05.08.2015 –

30.04.2016

EUR

Income from expense compensation (see note 19) 109 041

Total 109 041

9. Fixed assets and intangible assets

Investments

in intangible

assets

Intangible

assets

Other fixed

assets

Total

Acquisition cost

EUR EUR EUR EUR

As of August 5, 2015 - - - -

Additions

116 073 107 388 127 074 350 535

As of April 30, 2016

116 073 107 388 127 074 350 535

Accumulated depreciation and

amortization

As of August 5, 2015 - - - -

Calculated depreciation and

amortization

- 12 705 8 845 21 550

As of April 30, 2016 - 12 705 8 845 21 550

Net book value as of August 5, 2015 - - - -

Net book value as of April 30, 2016 116 073 94 683 118 229 328 985

SIA TWINO



21


10. Investments in subsidiaries

As of April 30, 2016, the Company had the following investments in subsidiaries (non-audited data):

Subsidiary, type of activity

Country Book value of the Company’s investment in subsidiary as of 30.04.2016

Equity of subsidiary as of 30.04.2016

Subsidiary’s value of balance sheet as of 30.04.2016

The reporting period net result for the subsidiary as of 30.04.2016

Company's share in the share capital of the subsidiary as of 30.04.2016

EUR EUR EUR EUR %

INCREDIT Sp. z

o.o., (PL)

Financial services Poland 44 353 30 398 1 326 849 (13 955) 100%

MONEZA Sp. z

o.o., (PL)

Financial services

Poland 44 353 44 353 45 491 - 100%

MONEZA OOO

(RU),

Financial services

Russia 676 683 7 965 - 99%

Zing Kazakhstan

LLP (KZ),

Financial services

Kazakhstan 569 (12 065) 54 124 (12 634) 100%

Total

89 951 63 369

11. Receivables from customers

30.04.2016

EUR

Loan principle 17 801 291

Next period assignment rights mark-up costs 1 293 954

Accrued interest 853 548

Accrued commissions 566 670

Other accrued income 4 161

Deferred revenue from commissions (295 891)

Gross receivables from customers 20 223 733 Provisions for impairment of receivables from

customers (1 106 151)

Net receivables from customers

19 117 582

During the reporting period estimated weighted average annual effective interest rate of receivables from

customers was 152%.

Changes in provisions for impairment of receivables from customers:

05.08.2015 –

30.04.2016

EUR

Provisions at the beginning of the reporting period -

Increase of provisions 3 563 271

Decrease of provisions as a result of sale of receivables from customers (2 457 120)

Total change for the reporting period 1 106 151

Provisions at the end of the reporting period 1 106 151

SIA TWINO



22


11. Receivables from customers (continued)

As the result of the Group`s assignment transactions, loan portfolios and related credit risks are transferred to the

Company. However, after selling the customer loan portfolio to the assignment transaction parties, the Company

still keeps the credit risk. Therefore, the assigned customer loan portfolio remains at the Company`s balance sheet.

As at the end of the reporting period, the remaining balance of the loan portfolio that consisted of customer loans

purchased byassignment transaction parties amounted to EUR 6 340 971.

12. Corporate income tax

12. (a) Significant components of corporate income tax:

05.08.2015 –

30.04.2016

EUR

Corporate income tax expenses 1 052 069

Deferred tax income (157 456)

Total 894 613

Corporate income tax differs from the theoretically calculated tax amount that would arise applying the 15% rate

stipulated by the law to profit before taxation:

05.08.2015 –

30.04.2016

EUR


Corporate income tax at the statutory rate of 15% 921 325

Tax effect of:

Non-deductible expenses for tax purposes 17 488

Tax deductions for donations (44 200)

Total 894 613

12. (b) Deferred tax liabilities and (assets) are attributable to the following temporary differences:

30.04.2016

EUR

Deferred tax liabilities:

Temporary difference on finance and tax depreciation values of

fixed assets and intangible assets

13 570

Total deferred tax liabilities 13 570

Deferred tax (assets):

Temporary difference on accrual for unused employee vacations (5 103)

Temporary difference on provisions for impairment of receivables from customers (165 923)

Total deferred tax (assets) (171 026)

Gross deferred tax (assets) (157 456)

Unrecognised deferred tax assets -

Net recognized deferred tax (assets) (157 456)

Deferred tax is calculated by applying the currently effective tax rate of 15%.

The calculation includes only the allowance for those doubtful and bad trade receivables which are expected to

become deductible for corporate income tax purposes in the foreseeable future as these debtors are currently being

in the process of liquidation.

SIA TWINO



23


13. Other assets

30.04.2016

EUR

Deferred expenses 120 437

Accrued revenue 25 542

Other 59 794

Total 205 773

14. Share capital

As of April 30, 2016, the fully paid and registered share capital of the Company amounts to EUR 2 800 and consists

of 2 800 shares with a nominal value of EUR 1.00 per share. All the shares have equal voting and dividend rights.

15. Payables for assignment rights

30.04.2016

EUR

Short-term liabilities 5 736 656

Long-term liabilities 846 729

Total 6 583 385

This position reflects the settlements with the Latvian and foreign individuals for assignment rights on consumer

loans. The weighted average annual effective interest rate for assignment rights for the reporting period was 12.2%.

16. Payables to related parties

Position reflects payabvles to related parties for the purchase of assignment rights.

30.04.2016

EUR

Long-term liabilities -

Short-term liabilities 14 759 511

Total 14 759 511

17. Other payables

30.04.2016

EUR

Trade payables 212 246

Accrued liabilities 193 713

Other tax payables 97 853

Other provisions 34 023

Total 537 835

18. Average number of employees

05.08.2015 –

30.04.2016

Management 2

Other 19

Total 21

As at October 30, 2016 the actual number of employees is 81

SIA TWINO



24


19. Related party transactions

Subsidiaries and

related parties Status Address Country

Zing Kazakhstan LLP,

reg. No. 1167746297762 Subsidiary

78 Masanchi Str., 050012,

Almaty, Kazakhstan Kazakhstan

Incredit Sp. z o.o., reg.

No. 0000604092 Subsidiary

27 aleja Jana Pawla II, 00-876

Warsaw, Poland Poland

Moneza Sp. z o.o., reg.


87 Grzybowska Str., 00-844


Moneza MFO OOO, reg.


12 Presnenskaya nab. Str., apt. 4,

Moscow, 123100, Russian

Federation

Russian

Federation

Finabay, SIA, reg. No.

40103254681

The Company's parent

company until October

2016 (see note 20)

Mukusalas street 41, Riga LV-

1004, Latvia Latvia

NET CREDIT Sp. z o.o.,

reg. No. 0000401570 Related company

Żytnia 15 lok 21b, 01-014


Payday Loans Sp. z o.o.

SKA, reg. No.

0000424914

Related company Żytnia 15 lok 21b, 01-014


The Business Group Sp.

z o.o. SKA, reg. No.

0000424914

Related company 27 aleja Jana Pawla II, 00-876


TWINO LLC, reg. No.

401993606 Related company

118 Tsereteli ave, Pavilion 10,

0119 Tbilisi, Georgia Georgia

OC Finance SIA, reg.

No. 40103203191 Related company

Mukusalas Str. 41, Riga LV-

1004, Latvia Latvia

Net Credit s.r.o., reg. No.


1349/2 Vyšehradska Str., Nove

Mesto, Prague, Czech Republic Czech Republic

NetCredit ApS, reg. No.


18 Kronprinsessgade Str., DK-

1306 Copenhagen, Denmark Denmark

RAPIDO FINANCE

S.L., reg. No.

B93366862

Related company 91 Paseo de la Castellana Str.,

4a, 28046 Madrid, Spain Spain

FINABAY MEXICO

S.A. de C.V., reg. No.

FME151012AWZ

Related company

Calle Montecito Nr.38, piso 8,

oficina 28, colonia Nápoles,

C.P.03810, Mehiko, Mexico

Mexico

E-Zaem MFO OOO, reg.

No. 1127746672130 Related company

12 Presnenskaya nab. Str., apt. 4,

Moscow, 123100, Russian

Federation

Russian

Federation

Affiliate Solutions SIA,

reg. No. 40103744480 Related company

Mukusalas Str. 41, Riga LV-

1004, Latvia Latvia

SIA TWINO



25


19. Related party transactions (continued)

Related party transactions:

Income

05.08.2015 –

30.04.2016

EUR

Income from expense compensation 109 041

Total 109 041

Expenses

05.08.2015 –

30.04.2016

EUR

Assignement rights mark-up expenses 4 433 664

Rent of premises and maintenance 33 058

Accounting software expenses 2 215

Travel expenses 1 195

Total 4 470 132

Assets 30.04.2016

EUR

Receivables from sold assignment rights 5 528 668

Loans 2 563 393

Accrued interest 143 370

Total 8 235 431

The weighted average annual effective interest rate for loans issued to related parties was 15%.

Liabilities 30.04.2016

EUR

Payables for purchased assignment rights 14 759 511

Total 14 759 511

20. Significant events after reporting date

In July 2016, the Company acquired shares of consumer credit company Net Credit s.r.o. loacated in Czech

Republic and consumer credit company in Denmark NetCredit ApS, as well as founded Romanian consumer credit

company Netcredit IFN SA.

In September 2016, the Company acquired shares of Spanish consumer credit company RAPIDO FINANCE S.L.

At the date of signing these interim separate financial statements, the Company's management has performed

Group's reorganisation - merger project, as a result of which the Company's parent company SIA Finabay was

merged to the Company. Reorganization - merger was completed in October 2016 and as a result the Company

became the parent company of OC Finance SIA (Latvia), NET CREDIT Sp. z o.o. (Poland), FINABAY MEXICO

S.A. de C.V (Mexico) and TWINO LLC (Georgia), thus becoming the center of the Group.

*****

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