NEO Finance : interim financial information for 2023 Q1

NEO FINANCE, AB

Interim financial information for 2023 Q1

28 April 2023

Vilnius

1	NEO FINANCE, AB | INTERIM FINANCIAL INFORMATION FOR 2023 Q1

NEO Finance, AB

CONFIRMATION OF THE RESPONSIBLE PERSONS AT THE COMPANY

28 April 2023

Vilnius

We hereby confirm that, to the best of our knowledge, that sales report for Q1 2023 is a true and fair representation of the quarterly performance.

Head of Administration, NEO Finance AB

Evaldas Remeikis

Chief Financial Officer, NEO Finance AB

Tomas Savickas

NEO FINANCE, AB | INTERIM FINANCIAL INFORMATION FOR 2023 Q1

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INTRODUCTION PAGE page 4

BASIC INFORMATION ABOUT THE COMPANY

page 6

OVERVIEW OF THE COMPANY'S 2023 Q1 OPERATING RESULTS

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NEO Finance, AB

HEAD OF ADMINISTRATION

In Q1 2023 , NEO Finance, AB continued to increase the volume of all business segments. The company's income increased by 28% during the Q1 of 2023 and reached 1 014 thousand EUR. By comparison, in Q1 2022 it amounted to EUR 793 thousand. Revenue growth was mainly driven by peer-to-peer (P2P) lending activities, which grew by 34%. In addition, income related to payment activities grew by 21%. The income from P2P lending activity increased the most due to the increase in the administered loan portfolio, which reached 57.7 million EUR at the end of the quarter. Operating costs increased by 36%, from EUR 337 thousand in Q1 2022 to EUR 460 thousand in Q1 this year. The company's EBITDA and pre-tax profit grew by 130% and 911% respectively in the first quarter of the year, reaching EUR 167 thousand and EUR 72 thousand. For comparison, in 2022 Q1, these indicators respectively reached 73 thousand and 7 thousand EUR.

The results of the Q1 are optimistic. In addition to generating steadily growing profits, the company invests in improving risk management, information security, internal audit, money laundering prevention activities and improving processes in order to to maximise compliance with laws and regulations applicable to the company. In addition, the company devotes human and financial resources to upgrades of internal and external IT systems and the introduction of new modules in order to keep up with the pace of modern software development. At the beginning of this year, the customer identification solution was made more efficient and now become even simpler and more convenient for new customers. It is also important to note that the number of employees grew rapidly, with an increase of around 20% compared to last year. The median salary of employees, who worked a full month, reached almost EUR 2,900 in March and significantly exceeded last year's result. In a tight labour market, the Company's management is trying to adapt to the current challenges as much as possible and is raising salaries and offering other benefits to employees, for example: starting from March of this year, all employees of the company who have worked for at least 6 months are covered by health insurance at the expense of the company.

NEO FINANCE, AB | INTERIM FINANCIAL INFORMATION FOR 2023 Q1

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Paskolų Klubas

In Q1 2023, Paskolų Klubas granted loans worth EUR

9.95 million, an increase of 41% compared to Q1 2022. In March, we enjoyed an all-time record of loan applications approved in a single day, with the amount of loans listed for investment reaching EUR 345 660. In the Paskolų Klubas business segment, with the growth of loan volumes, the administered portfolio and the income of this segment, the Company generated a positive EBITDA, which reached EUR 389 thousand in the first quarter of this year. In order to reduce the risk of insolvency of borrowers, we offer them payment insurance solutions, which we continue to improve, automating the processes related to this service.

Neopay

In Q1 2023, the volume of payment initiation services with Neopay customers completing almost 6.5 million transactions, an increase of 41% compared to Q1 2022, when 4.7 million transactions were completed. In March, we achieved another solid record: we initiated 2.43 million transactions in a month. Most transactions were initiated from Swedbank and SEB banks. Although the majority of transactions are generated in the markets of Lithuania and Latvia, the number of customers and transactions in other foreign markets, especially in Estonia and Poland, is gradually increasing. In February, the Neopay team participated in the largest telecommunications exhibition, Mobile World congress, during which we increased the awareness of the Neopay brand and found new business partners. In February, we launched two new products: Neopay PayForYou (POS Lending) and Neopay 3 (Buy Now, Pay Later). We actively carried out the communication of these new services in the target segment of the Lithuanian market and signed the first contracts with e-shops. In order to gain a stronger foothold in the Polish market, we concluded a cooperation agreement with one of the largest international banks operating in Poland and completed the integration with one of the largest payment service providers in the country. In the near future, we plan to strengthen the sales team in the Polish market. In the open banking business segment, we not only earned record quarterly revenues, of EUR 287,307 thousand in the Q1 of the year, but also recorded a six-digit EBITDA value, while maintaining a rapid growth in the number of transactions.

FinoMark

The crowdfunding platform FinoMark mediated the issuance of business loans for 1.5 million EUR in Q1 2023, compared to EUR 0.5 million in Q1 2022. The company's income reached EUR 773 thousand in Q1 2023 compared to EUR 35 thousand in Q1 2022. As Finomark UAB is still in a start-up phase, the positive EBITDA and pre-tax profit figures of EUR -27 thousand and EUR -41 thousand respectively have not yet been achieved this quarter.

We can be pleased that the team is performing well and this is reflected in the results. Sales revenue and loan portfolio

grew steadily every quarter, and the platform continues to be improved, with the introduction of new functionalities, keeping the company's cost consumption optimal. We take the necessary steps to attract larger new investors and maintain close relations with existing and new smaller investors. For individuals and legal entities, who can also invest through the platform, we disclose as much targeted project information as possible, so that investors can choose the projects that best suit their needs. Today's challenge is to attract larger and institutional investors to invest larger sums through the platform, which is why we are open to various forms of cooperation that would allow us to grow faster. We are actively working on borrower administration with the aim of continuing to maintain the level of overdue loans of around 5-6%, based on the volume of issues.

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