An outstanding year with promising prospects for robust growth in the future

Operational and Strategic Highlights 
 

• Eleving Group finished the year 2023 with the best-ever business performance. Revenues, including fee and commission income, for the corresponding period reached EUR 191.1 mln, recording an increase of EUR 15.6 mln compared to 2022. Meanwhile, the net portfolio grew by EUR 27.1 mln and landed at EUR 320.2 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 selling of Renti Plus portfolio and and slightly decreasing Kenya motorcycle taxi loan portfolio (effect from unfavorable foreign currency rate development).
  • Traditional lease and leaseback products contributed EUR 68.0 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 successful results were driven by the efficient integration of the ExpressCredit business and outstanding performance in the Group’s European consumer markets. 

• 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 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).
• 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.
• 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.
• An important milestone in digitization was reached by launching an advanced online client cabinet for the Romanian market. The respective 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.

 
Financial Highlights and Progress 
 

• Solid profitability evidenced by strongest-ever business financials:
  • Adjusted EBITDA of EUR 77.2 mln (2022: EUR 63.9 mln). 
  • Adjusted Net Profit before FX of EUR 29.8 mln (2022: EUR 22.0 mln).   
  • Adjusted Net Profit after FX of EUR 23.4 mln (2022: EUR 14.6 mln).
  • Increased net portfolio of EUR 320.2 mln; Eleving Vehicle Finance and Eleving Consumer Finance accounted for EUR 215.3 mln and EUR 104.9 mln, respectively.  
  • 2023 ended with a healthy financial position, supported by the capitalization ratio of 26.3% (31 December 2022: 25.5%), ICR ratio of 2.3 (31 December 2022: 2.3), and net leverage of 3.7 (31 December 2022: 3.9), providing an adequate and stable headroom for Eurobond covenants.   

• 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.

*2022 profit adjusted by one-off costs: a) loss on write-down of held-for-sale business of EUR 0.8 million.

Modestas Sudnius, the CEO of 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.
Looking back, I can tell that we had very ambitious goals, and I am even more delighted to conclude that we managed to achieve most of them and even more. We were able to have a stable year with increasing portfolio quality; on top of that, 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, by capturing new possibilities in our existing markets and securing future financing by issuing new EUR 50 mln bonds.
Despite the uncertainty in the global economy, demand for consumer credit products has not weakened, and people's ability to pay is still higher than expected in a period of rising interest rates and inflation. In the vehicle financing segment, after a slightly slower start early in 2023, we recovered the dynamics in the second half. This mixed trend was, however, to be expected, as people temporarily postponed large purchases. In the meantime, the unsecured consumer finance business grew steadily throughout the year, benefiting from 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 even in an inflationary environment. 
In recent years, our mindset has been more focused on organic expansion in our core business lines. However, the integration of ExpressCredit business will allow us to expand while still maintaining strong position in other existing markets. We are open to exploring further growth opportunities through new market launches or acquisitions. However, it will not be growth at the cost of profit, and this would become a priority in case of additional equity injection in the business. We will continue actively participating in the capital markets and exploring all the opportunities these avenues 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 Baltic markets and outside it, not ruling out IPO as one of the routes.
In the meantime, the Group strengthened its position in green mobility by rapidly expanding the electric car-sharing service in Latvia and electric motorcycle financing service in Kenya. Our customers commuted over 3.2 million kilometers on pure electricity, thus reducing over 300tCO2 compared to what traditional vehicles would have produced. This year, more than in other years, we see 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 will likely continue next year, so we expect good results from our sustainable mobility products.”
Māris 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 77.2 mln, or by over 21%, compared to 2022, while the total revenue, including fee and commission income, reached EUR 191.1 mln, showing an increase of close to 9%. The adjusted net profit before FX landed at EUR 29.8 mln, up by 35%, while the net portfolio reached EUR 320.2 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 unaudited consolidated report on the 12M period ended on 31 December: https://eleving.com/investors/ 

Conference Call: 
A conference call in English with the Group's management team to discuss the results is scheduled for 14 February 2024 at 15:00 CET.
 
Link to register for a conference call can be found here.

Eleving Group 
Edgars Rauza, Eleving Group Investor Relations Manager
Email: edgars.rauza@eleving.com  

About Eleving Group 
Eleving Group comprises a number of financial technology companies with a global presence. The Group operates in the vehicle and consumer finance segments on three continents, providing financial inclusion and disruptively changing financial services industries in its countries of operation. Founded in 2012 in Latvia, the Group has revolutionized how people purchase cars. Having expanded across the Baltics within its first year in business, the Group continued expanding in the following years, servicing 16 active markets. With its headquarters in Latvia, the Group operates in the Baltics, Central, Eastern, and South-Eastern Europe, Caucasus, Central Asia, Sub-Saharan and Eastern Africa. For two consecutive years since 2020, the Group has appeared on the Financial Times list of Europe’s 1000 fastest-growing companies. 

IMPORTANT INFORMATION 
The information contained herein is not for release, publication, or distribution, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, or any other countries or otherwise in such circumstances in which the release, publication or distribution would be unlawful. The information contained herein does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the bonds in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. Persons into whose possession this announcement may come are required to inform themselves of and observe all such restrictions. 
This announcement does not constitute an offer of securities for sale in the United States. The bonds have not been and will not be registered under the Securities Act or under the applicable securities laws of any state of the United States and may not be offered or sold, directly or indirectly, within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. 

This announcement does not constitute a prospectus for the purposes of Directive 2003/71/EC, as amended (the "Prospectus Directive") and does not constitute a public offer of securities in any member state of the European Economic Area (the "EEA"). 

This announcement does not constitute an offer of bonds to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the bonds. Accordingly, this announcement is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this announcement as a financial promotion may only be distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as "Relevant Persons"). Any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this announcement or any of its contents. 

PROFESSIONAL INVESTORS ONLY – Manufacturer target market (MIFID II product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPs key information document (KID) has been prepared as the bonds do not constitute packaged products and will be offered to eligible counterparties and professional clients only.