Q4 report 2017, Avida Holding AB

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1 Q4 report 2017, Avida Holding AB Fourth quarter highlights Group results Continued strong volume growth of 76% YoY to SEK2,835m Revenues increased to SEK101m and profit increased to SEK21.9m Earnings before tax ended at SEK63.9m in 2017 compared to SEK11.3m in 2016 Private placement during Q3 with a total capital increase of SEK154m to fund the continued growth The CET1 ratio is 18.7% at the end of 2017, compared to Avida s target of 13% Consumer Finance Strong growth during the year and quarter with increased net lending of SEK967m (74%) for the full year and SEK226m (11%) for the fourth quarter, ending at a total loan book of SEK2,281m The net interest margin was 11.1% (12% in Q3) Loan loss provisions of 1% (1.7% in Q3) including gains from sale of NPLs Business Finance Good growth during the year and especially in Q4 with increased net lending of SEK254m (85%) for the year and SEK216m (64%) for the fourth quarter, ending at a total loan book of SEK554m Net interest margin of 35.9% (49.5% in Q3) Loan loss provision of 3.5% (7.6% in Q3)

2 Key developments in Consumer Finance operations Avida continued to show strong growth during the quarter with net lending growth SEK226m out of a total of SEK967m for the year. The growth was negatively impacted by a sale of a NPL portfolio in Sweden in the fourth quarter. All markets are showing strong growth and Finland continues to be the main growth engine. The Consumer Finance business is highly scalable, and Avida has implemented several initiatives that will greatly improve the long term cost efficiency and risk management. Avida entered into a forward flow agreement for Non Performing Loans in Norway in Q4 and are looking to enter into a similar agreement in Sweden during Q This agreement is expected to continue to have a positive impact on loan loss provisions going forward, confirming Avida s current conservative provisioning policy. Key developments in Business Finance operations Business Finance increased its volumes by SEK216m during Q4 out of a total of SEK 254m for the full year. The significant investments made in the Business Finance segment are starting to pay off, resulting in very positive development for the quarter. The main drivers of growth were in Finland and corporate loans in Norway, a product introduced in Q3 17. The business mix is changing towards larger and lower risk customers, which is evident from the significantly lower loan loss provisions. The business is scaled for significantly higher volumes and the marginal profitability of new business will be highly accretive. Significant events after the end of the quarter New CEO appointed Avida's CEO, Mr Johan Anstensrud, decided to step down from his position. The Board of Directors has appointed Mr Håkon Fure as interim CEO and Mr Tord Topsholm as new CEO from 1 April, Tord has a broad background from both the consumer and corporate business. He is a respected leader who has experience from fast-growing companies and from the increasing complexity within banking. Tord comes from the CEO role at Catella Bank and previously he has been Head of Sales & Service at Swedbank and before that COO at EnterCard which offers consumer loans and credit cards. New CFO appointed Arbab Dar assumed his position as CFO on February 1. Arbab Dar was previously the CFO of Nordea Norge and brings deep financial and industry experience to the team. Prior to Nordea he worked at EY, focusing on financial services. He holds a Master of Professional Accountancy. New agreements On February 19 Avida signed the final agreement with Norsk Gjenvinning AS, the agreement is Avida s largest to date. This client will go live during Q1. IFRS 9 implementation IFRS 9 comes into effect from Initial calculations indicate increased provisions for

3 impairment of loans amounting to about SEK59m. The expected effect on equity is a reduction of about SEK46m. Avida has decided to apply the phase-in rules for capital adequacy calculation. The effect as of on capital ratios is expected to be immaterial. Outlook The growth in 2017 was according to plan, however the Board was not satisfied with the cost developments in the quarter. Actions have been implemented to better control the cost development, and the Board remains confident in reaching the targets set out for 2018 with SEK5,000m in credit volume target and SEK160m in pre-tax profits. Consumer Finance is off to a good start on the year with strong growth, in particular in Finland. The pipeline for our Business Finance operation continues to grow rapidly and winning significant clients like Norsk Gjenvinning AS proves Avida s attractive customer offering and is a significant step forward for the company. Avida sees good growth prospects in all the three geographic markets, and our strategy of focusing on both Consumer and Business Finance gives us ample room to allocate capital to the most profitable opportunities. With a solid development for the start of the quarter with significant contract signed, we expect a solid improvement in operating income in for the first quarter in 2018.

4 About Avida Avida Holding AB owns Avida Finans AB (regulated by Finansinspektionen and offers consumer loans and business focused financing in Sweden, Norway and Finland) and Avida Inkasso AS (conducting collection services in Norway). Avida Finans AB is also conducting collection services in Sweden. Avida was acquired by new owners in second half Avida has ambitious growth plans for building a high growth and high quality Business Finance and Consumer Finance operation. Oslo, February 27, 2018 Board of Directors, Avida Holding AB

5 Profit and Loss Statement - Avida Holding AB SEKm Q Q FY 2017 FY Interest income 108,4 74,7 379,5 222,9 153,9 Interest cost -7,3-3,4-21,0-8,4-5,8 Net interest income 101,1 71,3 358,5 214,5 148,1 Net result from financial transactions -0,4-3,9-8,9-6,6-2,1 Other income 2,7 2,0 6,9 6,0 3,1 Total income 103,4 69,5 356,5 213,9 149,1 Administrative cost -68,7-46,6-229,0-152,0-99,8 Depreciation and amortization -2,4-1,6-8,1-5,6-3,9 Sum operational cost -71,1-48,2-237,1-157,7-103,8 Result before credit loss 32,3 21,3 119,4 56,3 45,4 Net credit loss -10,4-22,1-55,4-45,0-32,3 Operating profit / EBT 21,9-0,8 63,9 11,3 13,1 Tax -5,2 4,2-13,8 1,6-4,3 Profit after tax 16,7 3,4 50,2 12,8 8,8 Avida has over the last year seen a material growth in its balance sheet, primarily in the Consumer Finance segment. YoY there is an increase of 67% in total income while the costs increased 50%. Investments made over the last years are starting to be reflected in the results.

6 Balance Sheet Avida Holding AB SEKm Cash and balance to central bank 5,5 4,4 3,2 2,4 1,8 Certificates and bonds 91,0 81,9 67,4 68,2 54,5 Loans to credit institutions 834,7 592,2 299,5 495,0 198,7 Net loans to customers 2 835, , , , ,0 Shares and shares in ass. Companies 0,0 4,0 4,2 4,2 4,2 Intangible assets 26,3 22,4 21,2 18,3 15,3 Machines and inventories 5,3 5,4 5,4 5,7 5,4 Other assets 15,4 16,7 28,8 15,0 38,8 Prepaid expenses and accrued income 91,8 84,2 70,6 63,5 56,7 Total assets 3 905, , , , ,4 Deposits from customers 3 271, , , , ,3 Other liabilities 57,2 62,2 40,3 37,2 40,4 Accrued expenses and prepaid income 21,6 15,5 13,6 13,8 12,8 Deferred tax liabilities 4,5 4,5 4,7 4,7 4,7 Total liabilities 3 354, , , , ,3 Share capital 5,4 4,9 4,8 4,7 4,4 Retained earnings 528,5 334,4 360,6 272,6 250,9 Earnings in year 16,7 50,2 3,4 50,2 12,8 Total equity 550,5 389,4 368,9 327,4 268,2 Total equity and liabilities 3 905, , , , ,4 Net loans increased by SEK1,221m YoY and SEK442m during Q leading to a total net loans of SEK2,835m. The funding is mainly comprised of deposits and equity with deposits increasing by SEK1,608m YoY and SEK538m QoQ leading to a liquidity portfolio of SEK931m. The higher liquidity levels in Q4 is due to onboarding preparation for some large new clients and is expected to normalize in Q1. In Norway the deposit growth has been solid since the products introduction and soon covers the entire liquidity requirement in NOK. The equity base increased by SEK282m YoY and SEK161m Q leading to an equity base of SEK551m, implying a capital ratio of 18.1% (pro forma of 18,7%) - well above the capital targets and requirements. Avida successfully completed a private placement in Avida Holding AB during Q4 with a total capital increase of SEK154m.