ZAIM Credit Systems PLC Year-end trading update (9318A)

TIDMZAIM

RNS Number : 9318A

ZAIM Credit Systems PLC

27 January 2020

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For Immediate Release

27 January 2020

Zaim Credit Systems Plc

("Zaim" or the "Group")

Year-end trading update

Zaim Credit Systems plc (the 'Group' or 'Zaim'), the Russian focussed fintech group providing financial inclusion for those consumers who are not well served by mainstream lenders, is pleased to announce a post period end trading update from its wholly owned subsidiary, Zaim-Express LLC, ('Zaim-Express') in respect of 2019. Whilst it is too soon to provide the figures the Company expects to report for 2019, the Company presents below certain key metrics for Zaim-Express that give an indication of trading during the period and the current market opportunities.

Year-end trading update

Zaim was admitted to trading on the Official List (by way of a Standard Listing under Chapter 14 of the Listing Rules) on 4 November 2019 (the "IPO") and, in conjunction with this included in the Prospectus dated 30 October 2019 (the "Prospectus") unaudited interims to 30 June 2019. Generally, trading during 2019 was hampered by the lack of available liquidity due to the restructuring of the historic bonds and IPO taking place later in the year than expected. Despite the lack of liquidity and relatively small value of the loan book (GBP630k as at 30 June 2019) the business performed well and in line with management and the market expectations. The defaults rates have seen a steady improvement since the beginning of 2019 as a result of continual technical improvements being implemented to the credit scoring system.

2019 represented a year of considerable changes within the business with the recapitalisation of the group into an equity funded Group, the successful IPO as well as the improvements in the credit scoring system. In light of these changes the Group intends to report the amount funded and the weighted average default rate on a quarterly basis as its principal KPI's going forward. The Board believes these are key metrics for monitoring the performance of the business and presents these in the table below for the first three quarters of 2019, with data in respect of the latter for the final quarter of 2019 expected to become available after the end of Q1 2020:

 
 Quarter Ended               Mar 19     Jun 19     Sept 19    Dec 19 
 Amount Funded (GBP'000)     GBP2,322   GBP2,226   GBP2,196   GBP2,284 
                            ---------  ---------  ---------  --------- 
 Weighted Average Default 
  Rate                       9.0%       7.5%       5.6%       See note 
                            ---------  ---------  ---------  --------- 
 

Current market

The current demand the Group is experiencing is highly encouraging, with lending levels growing consistently. It is the expectation of management that with the existing and continued growth in demand for loans, there is ample opportunity to deploy in full the Group's available capital without compromising any of its lending criteria and still improving on it credit scoring and defaults rates.

Increase of loan book

The Group has commenced its strategy set out in the Prospectus to increase the loan book by GBP1.2m, representing an increase of the loan book of nearly 200% compared to 30 June 2019. This increase is being expected to be deployed over a period of 6 - 12 months in line with demand and changing dynamics of the customer base. Due care is being taken not to increase the loan book too rapidly to compromise the quality of customers and to ensure the default rates are not adversely affected.

Amounts funded in each of months of the final quarter of 2019 are set out in the following table:

 
 Period          Amount Issued   Amount Issued   Amount Issued 
                     Online         Offline          Total 
                   Unaudited       Unaudited       Unaudited 
                    GBP'000         GBP'000         GBP'000 
 October             GBP18          GBP703          GBP721 
                --------------  --------------  -------------- 
 November            GBP31          GBP694          GBP725 
                --------------  --------------  -------------- 
 December            GBP77          GBP761          GBP838 
                --------------  --------------  -------------- 
 Total Quarter      GBP126         GBP2,158        GBP2,284 
  4 
                --------------  --------------  -------------- 
 

Following the IPO of Zaim in early November there was a period of implementation before the newly adopted strategy of increasing the loan book commenced during December, which exhibited an increase of GBP113k compared to November.

Online Business

Historically Zaim-Express has been focussed entirely on its existing store infrastructure, but as set out in the Prospectus, the Group is now able to lend to online only customers without the requirement to physically undertake KYC and AML procedures in store. This has enabled Zaim-Express to commence online lending as of the latter part of 2019. The growth in the online loan demand has been very strong with the amounts funding growing from GBP18k in October to GBP77k in December (an increase of 427%), with little marketing expenditure or cost of acquiring new business. The Group looks forward to expanding its online offering but will remain vigilant in monitoring the strategy and results closely as it is newly implemented. The early signs of the online offering are far better than management's expectations and are deemed to be very encouraging.

As a whole the performance of the loan book since the date of the IPO has been in line with management expectations and as such the Group plans to continue to increase the amount funded over the coming months.

Renewal of Noah's Ark Loan facility

Zaim-Express LLC has successfully renewed the loan facility it holds with Noah's Ark 500 until 31 December 2020. The loan facility was originally entered into in May 2019 and was due to expire on 31 December 2019 unless an extension was requested by Zaim-Express LLC. There is currently nothing drawn down on the loan facility which has a limit of 30 million Roubles (approx. GBP365k). This facility will be maintained should the Group require additional liquidity over and above its current cash resources and expected loan book.

Outlook

The Group remains confident of its prospects and remains optimistic as to the current opportunity to significantly increase its lending volumes. This increase in lending volumes, combined with improvements in the credit scoring systems already in operation, mean the Group expects a material improvement in financial performance during 2020.

Zaim-Express plans to continue reinvesting net free cashflow generated into increasing the loan book further.

Timing of Year-end results

It is the intention of the Group to releases its audited results for the year ended 31 December 2019 during April 2020.

Siro Cicconi, CEO commented: "I am delighted to report on the first positive trading update since our IPO on 4 November. Zaim is at an exciting junction, with a rapidly growing market, sector consolidation due to the tightening of regulatory requirements, which ZAIM is already fully compliant with, as well as the new ability to execute entirely online with no requirements for store visits. I would like to thank the whole team who executed the IPO and welcome our new shareholders to what has already been a positive end to 2019 and start to 2020".

Enquiries:

 
 Zaim Credit Systems Plc 
 Simon Retter                        Tel: [phone] 
  Siro Cicconi 
 Alex Boreyko                       Tel: [phone] 
                                     [e-mail] 
 Beaumont Cornish Limited 
 Roland Cornish / James Biddle      Tel: [phone] 
 
 Optiva Securities Limited 
 Jeremy King / Vishal Balasingham   Tel: [phone] 
 

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January 27, 2020 02:00 ET (07:00 GMT)