March 19, 2020
Information for DelfinGroup investors in response to the situation in the country
DelfinGroup has taken all mandatory and recommended security measures in relation to coronavirus (COVID-19).
We expect slight negative changes in demand from our customers due to lower consumption of goods and services. We expect slightly lower issuance due to before mentioned reason, decrease in marketing spending and stricter solvency checks by the company. But we expect no substantial changes in customer payment discipline due to the following reasons:
- DelfinGroup’s average loan size per customer is small – 104 EUR for pawn loans and 560 EUR for consumer loans. Our active customer base is diversified and consists of around 115 000 people, and our passive customer base is close to 300 000 people.
- DelfinGroup has many long-term customers whom we trust because of successful historical cooperation since the company’s foundation in 2009.
In addition to above mentioned, our liquidity risk is relatively low as we have diversified financing structure – Mintos platform, bonds listed in Nasdaq Baltic, and own equity. Another successful bond issue has attracted 3.6 million EUR at 14% rate in the period from November 2019 until today.
DelfinGroup provides services in Latvia only, which we think is our competitive advantage – our economy is strong, we do not have currency risk, and we know our customers.
DelfinGroup was founded in 2009 during the previous global financial crisis. The company started off with one pawn shop which grew to a network of 50 pawn shops in less than a year. DelfinGroup’s business DNA was developed by taking into account hard lessons from the previous crisis – concrete hard cost discipline, long-term planning, and thorough processes – these have been present in the company since the very first day, and that is one of the reasons why the performance has been so stable and profitable all this time.
The crisis of 2008 was different compared to what we might see today because, on top of external factors, Latvia had internal problems too. Now the import and export is balanced, government debt is not too high, people have deposits more than interest-bearing liabilities, and the government is prepared to help our people and companies.
DelfinGroup would like to put emphasis on our strong balance sheet that will help us go through uncertain times. In addition to Mintos platform, an integral part of our group operations is financed by two bond issues with repayment terms almost 2 and 3 years from now.
|Group’s consolidated data as of 31.12.2019.|
|Net loan portfolio||31.6m EUR|
|Net Debt / Equity ratio||3.0|
|Net Debt / EBITDA ratio||3.1|
|Interest coverage ratio||2.5|
We understand that the length of current crisis is unpredictable, and we have taken all the necessary actions and will take additional actions, if necessary. Even if the crisis will last a year or more, we will be able to maintain our ratios, our portfolio, our customers’ and employees’ loyalty, and get back on growth track as soon as the crisis is over.
Chairman of the Board