SaveLend

Q2 - 1 April - 30 June 2024
Amounts in parentheses refer to the same period the previous year.

• Net revenue for the quarter was MSEK 41.6 (MSEK 40.5).
• EBITDA was MSEK 2.1 (MSEK 1.4).
• EBIT was MSEK -4.1 (MSEK -4.5).
• Net results was MSEK -4.9 (MSEK -4.6).
• Earnings per share before dilution were SEK -0.09 (SEK -0.09).

Period 1 January - 30 June 2024

• Net revenue for the period was MSEK 81.7 (MSEK 85.0).
• EBITDA was MSEK 3.8 (MSEK 5.9).
• EBIT was MSEK -9.0 (MSEK -5.6).
• Net results was MSEK -10.5 (MSEK -5.8).
• Earnings per share before dilution were SEK -0.20 (SEK -0.11).

Events during Q2

• On April 25, the annual general meeting of SaveLend Group AB was held.
• Acting CEO Peter Balod becomes the permanent CEO of SaveLend Group AB.
• SaveLend Group AB initiates a strategic review regarding its subsidiary Billecta AB.
• SaveLend Group AB carries out a directed share issue of 3,732,766 shares, raising approximately SEK 8.8 million.

Events after the quarter

• The shares from the directed share issue that was communicated in the second quarter were registered after the end of the quarter. The number of shares in SaveLend Group AB as of July 18 amounts to 57,286,016 shares. The share capital has increased by SEK 84,834.57, from SEK 1,217,119.34 to SEK 1,301,953.91.

CEO COMMENTS
During the second quarter of the year, our savings platform has continued to deliver annual returns according to plan. We have taken several important steps toward becoming more efficient, which is already beginning to show clearly in our results. However, we have not seen the development we hoped for in total capital on the platform. This is primarily driven by the macroeconomic situation and the fact that a number of larger real estate loans that were repaid during the period have led to withdrawals instead of reinvestments. The inflow of new capital has not fully compensated for the withdrawals. A lower total capital on the platform impacts our growth potential, which in turn has extended the path to profitability beyond our initial goal. However, it is clear that we are on the right track as we deliver an increase in EBITDA of almost 50 percent compared to Q2 2023.

The Macroeconomic Situation
On May 8th, a decision was made to lower the policy interest rate from 4.00% to 3.75%, a level that remains unchanged following the Riksbank's monetary policy decision on June 27th. Just under two years ago, the average interest rate on a fixed-rate account with a 12-month term was barely 1%. As of June 30, 2024, individuals can secure a fixed interest rate of 6% with SaveLend, which is 1.65 percentage points higher than what is offered by banks and credit institutions. The return on our savings platform is not tied to the policy interest rate in the same way as the interest rates on bank savings accounts. As a result, although our platform continues to perform as expected, the difference in returns compared to bank fixed-rate accounts has decreased. The Riksbank's openness to multiple rate cuts in the second half of the year will therefore, all else being equal, strengthen our position and competitiveness as a savings alternative for the important retail savings segment.

Returns, Strategies & the Secondary Market
The key to attracting more capital from our private savers lies in continuing to deliver the expected returns. It is therefore a strong indicator that, now with just over a year since the launch of the investment strategies 'Balanced' and 'Yield', we can report an annual return of 7.09% and 8.12%, respectively. This is within the target return for both strategies and represents a very competitive return for our savers! Our secondary market has also been affected by the lower-than-planned capital inflow on the platform, which has led to a longer-than-desired time to complete transactions for savers looking to sell all or part of their holdings. Significant internal efforts have been made to improve the functioning of the secondary market given the new market conditions. During May and June, over MSEK 20 in credits have changed hands on the platform, which we see as a great success.

The legislative proposal & directed share issue
There is much to celebrate from the past quarter, but, as always, there are also challenges. One of these comes from the Ministry of Finance, with its memorandum titled "Enhanced Consumer Protection in the Credit Market," published on May 7th. In short, the proposal suggests that the "Certain Consumer Credit-related Operations Act" which was adopted in July 2014, will be repealed as of June 30, 2025. The consequence would be that around seventy lenders and loan intermediaries, currently under the supervision of the Swedish Financial Supervisory Authority (Finansinspektionen) as "consumer credit institutions," would have to cease their consumer credit activities. This is unless they apply for and are granted permission to operate as a credit institution. However, those already in operation would be allowed to continue their consumer credit activities until June 30, 2026, or until a potential application for a credit institution license is fully processed.

The proposal is currently in its first round of consultation, which runs until September 9 this year. Our position is that while we welcome initiatives aimed at strengthening consumer protection, the proposal to prohibit over seventy companies from conducting their business is not the best approach. There are other parallel proposals that we believe could have better effects in countering over-indebtedness. For example, we view very positively what the authorities in Finland have achieved with their national credit and salary register, which makes it easier for lenders to make better credit decisions.

Although we believe there is a good chance that the proposal may be amended from its current form, we must prepare the business for the risk that, with the current license, we may no longer be able to provide consumer credit on our savings platform as of June 30, 2026. To continue offering our savers the diversification that is key to our stable returns, we must therefore increase the share of loans and loan types where companies are the borrowers. We already have several different business loans on the platform, but opportunities must be created for substantial growth in this segment within a relatively short period. In addition to reducing investment opportunities for savers, a halt to consumer credit on the platform also means a loss of revenue for the Company. This must be offset by new revenue streams to achieve stable profitability. Transformation and growth require resources, and as part of this, we decided to conduct a directed share issue at the end of the quarter. I am very pleased with the outcome, and the chosen path should be seen as the most favorable for all our shareholders. The share issue provides us with better conditions to accelerate the transition towards a broader B2B offering for the platform's savers.

Billecta & strategic review
During the quarter, we also communicated a strategic review of our wholly-owned subsidiary, Billecta. The billing platform (Billecta) continues to deliver positive results and growth and has, together with a partner, won two public procurement contracts during the quarter, which are the first of their kind for the company. I believe this clearly shows that Billecta is ready to take the next step in offering its solutions to more players with larger volumes. Given the billing platform's model with very low churn, this bodes very well for future growth. One of the goals of Billecta's advanced autonomy work has been to enable the sale of all or part of the business, given a structure that would benefit the continued growth of both SaveLend Group and Billecta. Personally, I am impressed by Billecta as a company, by the staff under the leadership of CEO Mats Röjdmark, and by the business model. Therefore, I see very clear value in the company, and even if the strategic review does not result in a sale, I am pleased that there has been interest from several different parties.

Second half of the year & beyond
We entered 2024 with a clear plan and goal to develop SaveLend Group into a company with positive quarterly cash flows and long-term sustainable profitability. That goal has not changed. However, we have been affected by external factors that have both limited our growth of capital on the platform and forced us to adapt our model faster than we initially intended. With the activities already carried out as a foundation and the strong development of results compared to net revenue, I am very positive that we will start to see the real results of our efficiency efforts in the second half of the year. Additionally, I believe that our savers will have a greater opportunity for even better returns than before, thanks to our forward-looking focus on B2B. To all our shareholders, I would like to express my gratitude for your continued trust in us. Even though profitability has been delayed, I am convinced that you will feel it was well worth the wait.