Fellow Finance’s Financial Statements Release 2020
FELLOW FINANCE PLC COMPANY ANNOUNCEMENT 23.2.2021 AT 8:00 AM
Loan volume decreased from 2019 due to the COVID-19 pandemic
1.1. – 31.12.2020 in brief
- Turnover was 11.1 million euros (14.2), decreased by 22.0%.
- EBIT was 0.6 million euros (1.6).
- EBIT margin was 5.5% (11.6).
- Adjusted EBIT was 0.6 million euros (2.3).
- Adjusted EBIT margin was 5.5% (16.5).
- Profit of the financial year was -0.9 million euros (-0.1).
- Adjusted profit was -0.9 million euros (0.5).
- Earnings per share (EPS) was -0.12 euros (-0.01).
- Adjusted earnings per share (Adjusted EPS) was -0.12 euros (0.08).
- End balance of the balance sheet was 28.4 million euros (36.0).
- Equity at the end of the period was 13.6 million euros (14.5).
- Cash and cash equivalents at the end of the period was 3.8 million euros (3.9)
- Number of outstanding shares at the end of the period 7 173 625 (7 173 625).
- Intermediated loan volume was approximately 130.7 million euros (200.7).
- Business lending accounted for 40.0% of the total loan volume.
- The temporary regulation for the industry caused by COVID-19 pandemic cut the loan volumes significantly.
1.7. – 31.12.2020 in brief
- Turnover was 5.3 million euros (7.0), decreased by 24.4%.
- Profit of the reporting period was -0.2 million euros (-0.5).
- EBIT was 0.7 million euros (0.3).
- EBIT margin was 12.5% (3.9).
- Adjusted EBIT was 0.7 million euros (1.0).
- Adjusted EBIT margin was 12.5% (14,0).
- Earnings per share (EPS) was -0.02 euros (-0.07).
- Adjusted earnings per share (Adjusted EPS) was -0.02 (0.01).
- Intermediated loan volume was approximately 63.8 million euros (91.7).
- Intermediated loan volume in business loans grew 48% comparing to the same time period in 2019.
- Teemu Nyholm was appointed as the new CEO of the company.
- The company published an updated strategy and long-term financial goals on 8th of December 2020.
CEO Teemu Nyholm: a year of the COVID-19 pandemic and renewal
In 2020, the COVID-19 pandemic and COVID-19 related restrictions together with the overall insecurity regarding the economic development hampered our business in several ways. The spreading of the pandemic to Europe in the spring led into a situation where a significant part of our investor clients interrupted their new investments on the platform as a natural precautionary measure, which resulted in decrease of the financing supply in our service. Simultaneously we tightened our credit criteria in both business and consumer financing to maintain the return levels for our investors. In addition, Finland and Poland, the central markets to us, saw temporary regulation caused by the COVID-19 pandemic. This limited the possibilities of intermediating and marketing of loans. These factors combined led into a decrease of 33% in loan volumes compared to 2019.
However, we can be satisfied that the fixed income investment product that we provide for our investors and our credit risk management proved their strength in the very challenging market environment. The repayment levels of both business and consumer loans did not face any significant decrease. The average returns on the platform remained stable and on the pre-pandemic level. As a result, at the end of H1/2020, our investor clients reactivated investing gradually, which led to a recovery in loan volumes. We were also able to adjust our expenses and thus the result for H2/2020 returned to close to zero from the significant loss of the H1/2020.
We are pleased with the development of the business financing in H2/2020. Despite of the challenging business environment and tightened credit approval criteria, the loan volume grew by 48% compared to H2/2019. Especially the invoice funding products showed their elasticity and efficiency from the risk management point of view enabling funding of our business lending customers in uncertain times. This way we were able to participate the continuity of Finnish SME companies over the crisis caused by the COVID-19 pandemic.
In H2/2020, we focused on strengthening the foundation of our business: together with the Board and the Management Team, we defined a new strategy and long-term financial targets for the company. The core of the new strategy are the new payment and e-commerce financing products to be launched in 2021. With the new products, we can serve our customers more comprehensively and be more closely involved in their daily lives. The objective is to increase profitability per customer. In the future, we will focus and invest more strongly in selected international markets and reduce lending through our own balance sheet. For investors, we will move our product range towards low-risk and steady return products. We also aim to increase the share of institutional investors in our customer base. Following the change of CEO in last summer, we clarified and strengthened our organization with key personnel recruitments. These actions have created and will create the foundation of growth and profitability in the coming years.
Financial targets and guidelines for 2021
The COVID-19 pandemic still impacts our business in 2021 causing uncertainty about the possible continuation of the temporary regulation and thus making it difficult to predict especially the level of growth in funding provided by our loan investors. Despite the uncertainty, we expect revenue growth compared to 2020. We also anticipate that the result for 2021 will remain slightly unprofitable because of investments in new products and growth for the upcoming years.
The Board of Directors of Fellow Finance proposes that no dividend shall be paid for the financial year 2020.
Fellow Finance's Annual General Meeting 2021 is tentatively scheduled to be held in Helsinki on March 31, 2021 at 2:00 PM. The Board of Directors will later send a separate invitation to the meeting. The Annual Report 2020, including the Financial Statements and the Report by the Board of Directors, will be published on the company's website in week 10.
Teemu Nyholm: CEO, Fellow Finance Plc, email@example.com, tel. +358 50 577 1028
Certified advisor: Evli Bank Plc, tel. +358 40 579 6210
Fellow Finance Plc is a loan-based crowdfunding and peer-to-peer lending platform. The company’s mission is to transform the traditional financing and payments to direct transactions between people and businesses. Fellow Finance has intermediated consumer and business financing of more than 700 million euros in Finland, Sweden, Denmark, Germany, Poland and Czech Republic and served more than 900 000 customers. The company is regulated by the Financial Supervisory Authority of Finland as an Authorized Payment Institution and listed on the Nasdaq First North Growth Market Finland. www.fellowfinance.com