#1ferratum Ferratum Capital Gorn Investor Presentation Contemplated Senior Unsecured Bond Issue ASSICURAZIONI GENERALI CETRIESTE E VENEZIA March 2019#2Disclaimer (1/2) This Presentation (the "Presentation") has been produced by Ferratum Capital Germany GmbH (the "Issuer", or together with Ferratum Oyj (the "Guarantor") and their direct and indirect subsidiaries "Ferratum Group" or the "Group") solely for use in connection with the contemplated offering of bonds (the "Bonds") (the "Transaction") and may not be reproduced or redistributed in whole or in part to any other person. The sole bookrunner for the Transaction is Pareto Securities AB (the "Sole Bookrunner" or "Pareto Securities"). This Presentation is for information purposes only and does not in itself constitute an offer to sell or a solicitation of an offer to buy any of the Bonds. By attending a meeting where this Presentation is presented, or by reading the Presentation slides, you agree to be bound by the following terms, conditions and limitations. No investment decision shall be made solely on the basis of this Presentation. All information provided in this Presentation has been obtained from the Group or publicly available material. Although, the Sole Bookrunner has endeavoured to contribute towards giving a correct and complete picture of the Group, neither the Sole Bookrunner nor any of its parents or subsidiaries or any such company's directors, officers, employees, advisors or representatives (collectively the "Representatives") shall have any liability whatsoever arising directly or indirectly from the use of this Presentation. Moreover, the information contained in this Presentation has not been independently verified, only a limited due diligence by way of a management interview has been carried out and the Sole Bookrunner assumes no responsibility for, and no warranty (expressly or implied) or representation is made as to, the accuracy, completeness or verification of the information contained in this Presentation. The Group or the Sole Bookrunner do not intend to, and do not assume any obligation to, update the Presentation. An investment in the Bonds involves a high level of risk. Several factors could cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements that may be expressed or implied by statements contained in this Presentation. By attending a meeting where this Presentation is presented, or by reading this Presentation, you acknowledge that you will be solely responsible for and rely on your own assessment of the market and the market position of the Group and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Group, its business and the Bonds and other securities. The content of this Presentation is not to be construed as legal, credit, business, investment or tax advice. Each recipient should consult with its own legal, credit, business, investment and tax advisers to receive legal, credit, business, investment and tax advice. Any binding terms and conditions relating to the Transaction will be included in a separate document. Any decision to subscribe for or purchase any of the Bonds mentioned in this Presentation should be made only on the basis of the final terms and conditions of the bonds, and not this Presentation. Only a limited due diligence by way of a management interview has been carried out with respect of the group in connection with the preparation of this Presentation. Thus, there may be risks related to the Group which are not included in this Presentation and which could have a negative effect on the Group's operations, financial position, earnings and result. We emphasize that investments in bonds can involve great risks. All investors must be prepared that such an investment can cause a partial or total loss of the investment. Investors who neither can nor want to incur such risk should not enter into these types of investments. Each potential investor in the Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (a) have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained or incorporated by reference in this document or any applicable supplement; (b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the impact other bonds will have on its overall investment portfolio; (c) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds; (d) understand thoroughly the final terms and conditions for the Bonds; and (e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the relevant risks. Neither this Presentation nor any copy of it or the information contained herein is being issued, and nor may this Presentation or any copy of it or the information contained herein be distributed directly or indirectly, to or into Luxembourg, Canada, Australia, Hong Kong, Italy, New Zeeland, the Republic of South Africa, Japan, the Republic of Cyprus, the United Kingdom or the United States (or to any U.S. person (as defined in Rule 902 of Regulation S under the Securities Act)), or to any other jurisdiction in which such distribution would be unlawful, except as set forth herein and pursuant to appropriate exemptions under the laws of any such jurisdiction. Neither the Group nor the Sole Bookrunner, or any of their Representatives, have taken any actions to allow the distribution of this Presentation in any jurisdiction where any action would be required for such purposes. The distribution of this Presentation and any purchase of or application/subscription for Bonds or other securities of the Group may be restricted by law in certain jurisdictions, and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the applicable securities laws of any such jurisdiction. None of the Group or the Sole Bookrunner or any of their Representatives shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection with the Presentation. Neither the Group nor the Sole Bookrunner have authorised any offer to the public of securities, or has undertaken or plan to undertake any action to make an offer of securities to the public requiring the publication of an offering prospectus, in any member state of the European Economic Area which has implemented the EU Prospectus Directive 2003/71/EC, as amended (the "Prospectus Directive") and this Presentation is not a prospectus for purposes of the Prospectus Directive. In the event that this Presentation is distributed in the United Kingdom, it shall be directed only at persons who are either (a) "investment professionals" for the purposes of Article 19(5) of the UK Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), (b) high net worth companies, unincorporated associations and other persons to whom it may lawfully be communicated in accordance with Article 49(2)(a) to (d) of the Order, or (c) persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any Bonds may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "Relevant Persons"). Any investment or investment activity to which this Presentation relates will be available only to Relevant Persons and will be engaged in only with Relevant Persons. This Presentation is not a prospectus for the purposes of Section 85(1) of the UK Financial Services and Markets Act 2000, as amended. Accordingly, this Presentation has not been approved as a prospectus by the Financial Conduct Authority (the "FCA") under Section 87A of the Financial Services and Markets Act 2000 and has not been filed with the FCA pursuant to the UK Prospectus Rules nor has it been approved by a person authorised under the Financial Services and Markets Act 2000. This Presentation does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. In the event that this Presentation is distributed in the United States, it shall be directed only at persons who are "qualified institutional buyers" as defined in Rule 144A promulgated under the Securities Act ("Rule 144A") ("QIBS") in reliance upon Rule 144A under the Securities Act. The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction in the United States. Accordingly, the Bonds may not be offered, sold (directly or indirectly), delivered or otherwise transferred within or into the United States or to, or for the account or benefit of, U.S. Persons, absent registration or under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Bonds are being offered and sold only (i) outside the United States to persons other than U.S. persons ("non-U.S. purchasers", which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for non-U.S. beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act ("Regulation S") and (ii) in the United States to QIBS in reliance upon Rule 144A under the Securities Act. As used herein, the terms "United States" and "U.S. person" have the meanings as given to them in Rule 902 of Regulation S under the Securities Act. By accepting receipt of this Presentation, you warrant and represent that (i) if you are located within the United States and/or a U.S. person or in the United States, you are a QIB, (ii) if you are a non-U.S. person, you are a Qualified Investor (as defined in the Prospectus Directive (with cross- references therein)), or a Relevant Person (as defined above). This Presentation has been prepared exclusively for the benefit and internal use of the recipient and no part of this Presentation or the information it contains may be disclosed, reproduced or redistributed to any other party without the prior written consent of the Sole Bookrunner. This Presentation is dated March 2019. Neither the delivery of this Presentation nor any further discussions of the Group or the Sole Bookrunner with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Group since such date. The Group does not undertake any obligation to review or confirm, or to release publicly or otherwise to investors or any other person, any revisions to the information contained in this Presentation to reflect events that occur or circumstances that arise after the date of this Presentation. ferratum 2#3Disclaimer (2/2) Conflict of Interest The Sole Bookrunner and/or its Representatives may hold shares, options or other securities of the Group and may, as principal or agent, buy or sell such securities. The Sole Bookrunner may have other financial interests in transactions involving these securities or the Group. The Issuer and any other member of the Group may, subject to applicable laws, purchase Bonds. It should be noted that the Group may have interests that conflict with other bondholders particularly if the Group encounters difficulties or is unable to pay its debts as they fall due. Target market Solely for the purposes of the manufacturer's (as used herein, "Manufacturer" refers to the Sole Bookrunner) product approval process, the target market assessment in respect of the Bonds has led to the conclusion that: (i) the target market for the Bonds is eligible counterparties, professional clients and retail clients, each as defined in Directive 2014/65/EU (as amended, "MIFID II"); and (ii) all channels for distribution of the Bonds to eligible counterparties, professional clients and retail clients are appropriate. Any person subsequently offering, selling or recommending the Bonds (a "Distributor") should take into consideration the Manufacturer's target market assessment; however, a Distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Bonds (by either adopting or refining the Manufacturer's target market assessment) and determining appropriate distribution channels. PRIIPS regulation As the Bonds are not deemed to fall within the scope of Regulation (EU) No 1286/2014 (as amended, the "PRIIPS Regulation"), no PRIIPs key information document (KID) has been prepared. For the avoidance of doubt, the target market assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Bonds. Placement fee The Sole Bookrunner will be paid a fee by the Issuer in respect of the placement of the Transaction. Forward looking statements Certain information contained in this Presentation, including any information on the Group's plans or future financial or operating performance and other statements that express the Group's management's expectations or estimates of future performance, constitute forward-looking statements (when used in this document, the words "anticipate", "believe", "estimate" and "expect" and similar expressions, as they relate to the Group or its management, are intended to identify forward-looking statements). Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. The Group cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Group to be materially different from the Group's estimated future results, performance or achievements expressed or implied by those forward-looking statements Claims and litigations Claims or legal action may in the future be made or initiated against the Group which may have significant unfavourable effects on the Group's financial position, performance and market position or on the pricing of the Bonds. Audit Review of financial information Certain financial information contained in this Presentation has not been reviewed by the Group's auditor or any other auditor or financial expert. Hence, such financial information might not have been produced in accordance with applicable or recommended accounting principles and may furthermore contain errors and/or miscalculations. The Group is the source of the financial information, and none of the Group or the Sole Bookrunner or any of its Representatives shall have any liability (in negligence or otherwise) for any inaccuracy of the financial information set forth in this Presentation. The Bonds will be governed by the final terms and conditions Any potential investor investing in the Bonds is bound by the final terms and conditions of the Bonds which the investor acknowledges having accepted by subscribing for such Bonds. Governing law and jurisdiction This Presentation is subject to Swedish law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Swedish courts. ferratum 3#4Transaction Structure and Use of Proceeds Simplified Transaction Structure Ferratum Oyj Guarantor Introduction ■ Ferratum Capital Germany GmbH ("Ferratum Capital", the "Issuer" or the "Funding SPV") is a subsidiary of Ferratum Oyj (the "Guarantor" and together with all its subsidiaries "Ferratum Group", "Ferratum" or the "Group") ■ The Issuer functions as a funding SPV for the Group as a whole and currently has two bonds outstanding of a total of EUR 125 million ■ The Issuer intends to issue new senior unsecured bonds in an initial amount of up to EUR 100 million under a total frame of EUR 150 million ■The net proceeds from the Bond Issue will be used to: ■ repay existing bonds outstanding of the Issuer of EUR 25 million; and ■ finance general corporate purposes of the Group. The Funding SPV can finance operations both under banking license and entities operating without banking license by intra-group loans ■The bonds will be guaranteed by the Guarantor ■Listed on Prime Standard of the Frankfurt Stock Exchange with a market cap of EUR 260.7 million ■ The Guarantor was founded in 2005 by the current CEO and largest shareholder (-55%), Mr. Jorma Jokela Remaining ~45% is free float² Summary of main terms available on next slide Ferratum Capital Germany GmbH Issuer and Funding SPV New bond issue Up to EUR 100m Sources and uses (EURm) Operating subsidiaries Refinance old bonds EUR 25m Sources Uses Senior Unsecured bond issue 100.0 Ferratum Capital Germany 4.875% 16/19 Bond 25.0 General corporate purposes³ 75.0 100.0 Total 100.0 Total Note: 1) As of close 18 March 2019 2) Including shares owned by Dorval and HSBC of 5.09% and 5.37%, respectively, and treasury shares of 0.67% 3) May include partial repayment of other credit lines as liquidity management ferratum 4#5Summary of Main Terms Issuer Status Tenor Initial issue volume Subsequent issue volume Credit rating Coupon / Pricing Use of proceeds Guarantor Call structure (American) Undertakings Change of control / De-listing (Guarantor) Listing Ferratum Capital Germany GmbH Senior unsecured 4 years Up to EUR 100 million EUR 50 million, increasing the outstanding amount to maximum EUR 150 million ■ Guarantor: BB- (stable), Fitch Ratings Bond: BB- (expected), Fitch Ratings 3 month Euribor + [•] % p.a., quarterly interest payments. Euribor floor at 0% Repay existing bonds of EUR 25m and general corporate purposes Ferratum Oyj Callable @ 101.00% after 36-42 months and @ 100.50% after 42-48 months Maintenance covenants: Net debt/ equity ≤ 3.50 (for Group) Negative Pledge Put at 101% of par Cross default Dividend restriction: ▪ 25% of previous year's net profit of the Group Frankfurt Stock Exchange Open Market, on or about issue date Nasdaq Stockholm, within 30-60 days after issue date Frankfurt Stock Exchange Prime Standard (provided volume requirement is met, best efforts basis) Swedish law and Nordic Trustee and Agency Jurisdiction and agent Sole Bookrunner Pareto Securities Note: Please see Term Sheet for details ferratum 5#6Investment Highlights Proven business model with banking license Nearly 14 years of experience offering credit and payment products for consumers and small business, currently active in 25 countries primarily in Europe Specialist in online processes with a centralized technology infrastructure and sales experts Self-learning Big Data Scoring System: State-of-the-art security for credit approvals and automatic processes EU banking license - enables passporting of license to other EU countries Profitable growth Profitable growth since establishment in 2005 - revenue and EBIT CAGR of 38.9% and 37.4% between 2014 and 2018 During FY 2018 the Group increased revenues with 18.3% while EBIT reached 14.4% of revenues Future growth via mobile bank application (start up investments during 2016) and access to deposit funding Net receivables have grown with a CAGR of 51.1% 2014-2018 Solid financial position and asset quality Group equity ratio of 21.5% and net equity ratio of 27.9% as of December 2018 Conservative net debt to equity ratio of 2.58x and strong liquidity position of EUR 116 million as of December 2018 Limited historical distributions, capped at maximum 25% of net profit going forward Strong asset quality with gross impairments of 4.9% of gross receivables and improving due to rigorous credit scoring Conservative impairment policy with reserves of 31.5% of gross receivables, December 2018 Strong corporate governance and experienced team EU banking license granted by Malta Financial Services Authority Prime standard listing on Frankfurt Stock Exchange with a market cap of EUR 260.7 million¹ Board of directors and management team with extensive experience within consumer finance, banking, legal and other businesses Note: 1) As of close at 18 March 2019 ferratum 6#7Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 7#8Ferratum Group in Brief Introduction ■ Ferratum Group is an international provider of unsecured digital consumer loans and small business loans headquartered in Helsinki, Finland ■ Offer customers fast and easy to use mobile lending and banking services Currently active in 25 countries ■ The Group was founded in 2005 by the current CEO and largest shareholder (-55%), Mr. Jorma Jokela ■ Listed on Prime Standard of the Frankfurt Stock Exchange since February 2015 ■ Business was initially focused on Finland, Sweden, and the Baltic countries ■ In 2007 and 2008 the Group expanded into Central and Eastern Europe as well as certain Western countries and the international expansion is continuing ■ Ferratum Group has enjoyed more than 13 years of profitable growth ■ CAGR of 38.9% and 37.4%, respectively, for revenues and EBIT since 2014 ■ The Nordics contribute with the highest share of revenues - 42.7% What we are... Historical Financial Development (EURm)¹ 70.5 10.6 2014 CAGR: 38.9% 154.1 111.0 16.5 2016 2015 Revenue by Geography² FY 2018 31.8% 3.8% 21.7% Northern Europe 42.7% Western Europe Eastern Europe Rest of the World What we are not... 21.1 262.2 Revenue 221.6 EBIT 2017 31.8 2018 37.8 Loan Portfolio by Product FY 2018 2.4% 9.1% 15.2% 47.9% Microloan ■PlusLoan 25.3% Credit Limit Business (SME) Mobile Bank Mobile lender and bank with deposit business BJUD Expert for Big Data scoring, mobile account opening, mobile contract conclusion Mobile Bank with EU wide license Source: Company filings. Note: 1) 2012 and onwards reported under IFRS and prior reported in accordance with FAS. 2) Northern Europe Finland, Sweden, Denmark, Norway; Western Europe = France, Germany, Netherlands, Spain, UK; Eastern Europe = Bulgaria, Croatia, Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Russia, Slovakia; Rest of the World = Australia, Brazil, Canada, Mexico, New Zealand, Nigeria Payday lender Credit card company Traditional retail bank ferratum 8#9A Compelling Investment Case Our business We provide financial services that enable and empower our customers 簡 Innovation & product diversification Our corporate strategy Our Mobile Financial Platform Model that allows us and our partners to scale services globally Our growth strategy Innovation, geographic expansion and global partnerships will generate sustainable, profitable growth Geographic Expansion Sustainable profitable growth הלב LE Mobile Platform ferratum 9#10More than 13 Years of Profitable Growth Geographic Expansion Product Diversification Banking licence Launch of the Mobile Bank 2019: Mobile Bank new generation Launch of Banking-as-a- Service ■ Initial focus on Finland, Sweden, and the Baltic countries ■ In 2007 and 2008 the Group expanded into Central and Eastern Europe as well as certain Western countries ■In 2011 and 2012, the Group decided to expand internationally and enter the markets in New Zealand and Australia as well as Russia With banking license obtained in 2012 and start of banking operations in 2013, the Group could further expand within EU through passporting of bank license Banking license also provides valuable deposit funding ■In 2015, the Group launched its mobile banking platform enabling an efficient roll-out of services across its active markets ■ As of December 2018, the Group had a total loan portfolio of EUR 321 million with 2.0 million total customers¹ and 792 thousand active customers² 2013 Mobile Concept 2005 2006 2007 2008 2009 2010 2011 2012 +FIN SWE EST LAT POL DEN No new GBR RUS No new countries LIT ESP BUL CRO countries. MLT CZE NZL SVK AUS NED Net Receivables (EURm) 257.4 184.3 106.8 61.5 7.9 14.0 23.0 38.0 44.0 2014 2015 2016 2017 GER ROM (•) CAN No new countries FRA BRA NIG NOR MEX 2018 No new countries 320.5 Number of total customers (millions)1 2.0 1.9 1.6 1.2 1.0 الاسر السـ T 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0.8 0.6 0.5 0.3 0.3 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Company Filings. Note: Malta has no local operations. 1) Active and former customers who have been granted one or several loans in the past or has an open mobile account. Implementation of GDPR led to deletions of 149,000 former customer records in 2018. 2) Customers with a Mobile Bank account and lending customers who have had an open balance in the last 12 months. If loans are >24m overdue, the customer is not considered active ferratum 10#11SME and PrimeLoan expands the offering to longer- term solutions & higher customer lifetime value Digital lending - product category evolution PRODUCT: SME Primeloan Credit Limit Plus Loan Microloan LOW LOAN AMOUNT SOLUTION: HIGH HIGH APR LOW LONG All products are based on the same principles: Full digital setup and high user convenience, real-time, paperless MATURITY SHORT SME - Business loan offering for small and medium size companies PrimeLoan introduced in two countries, supports entering bigger mass markets with lower pricing Credit Limit and Plus Loan continue to be main growth drivers short term MicroLoan strategically utilized primarily as a product to enter new markets ferratum 11#12Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 12#13Fast, Efficient and Easy Application Process - 100% Online Ferratum USPS 1 Loan application 2 3 Check Customers credit and ID by Ferratum and via external databases Decision Instant loan decision1 (online, mobile) 4 5 Approval Loan approval by customer (online, mobile) Contract is set Payment Loan payout by Ferratum Invoice via mail 6 Repayment Invoice via post, loan and handling fee payment by customer on due date Customer Actions Target: 15 minutes² Tenor varies across products Note: 1) A large number of loans are not approved and the process is stopped after such credit decision, 2) Subject to local characteristics ferratum 13#14Acquisition Strategy Strong Networking of Customer and Platform ■ To attract new customers, the Group primarily employs online marketing such as: ■ Search engine marketing (SEM) Search engine optimization (SEO) ■ Affiliate online partners marketing ■Loan brokers ■ Social media ■ To a lesser extent, the Group also engages in offline marketing through television, radio and newspaper advertisements ■ Websites constructed and optimized to convert maximum of demand into loan applications ■ Customer satisfaction creates repeat business and referrals Easy and simple to use services in combination with focus on customer service functions ■ Customer are generated through online and offline marketing as well as repeat business Creating Demand ■TV, Radio, Outdoor Branding, PR Sponsoring Collecting Demand SEO, SEM ■ Affiliates & Brokers Referral Program 1 Active Demand Searching for banking related services Referrals 0 mm 4 Repeat Business 3 Converting Demand Retention / Loyalty (S) ferratum 14#15Credit Scoring, Acceptance levels and Collection of Loans Primarily digital identification via mobile and online bank with no physical meetings required1 Scoring and credit policies are centrally steered by the risk team An application scorecard is used to assess new customers and a behaviour scorecard is used to assess repeated customers ■ Based on credit score, customers are grouped into risk classes that ultimately affect the credit decision ■ In its credit scoring the risk team assess internal big data technology (see next slide), public databases, national credit losses registers, statistics databases, and public tax databases if available ■ The scoring model is based on FICO analytics and further developed by the risk team Monitoring systems are in place to accommodate the early identification and management of deterioration in loan quality (daily, weekly, and monthly checks) Source: Company Filings ■ The Group's stringent credit scoring and identification system resulted in an average approval rate of consumer loan applications of 13% during 2018 Approved loans are paid out via bank account money transfer within minutes from application ■ The credit scoring and loan acceptance process is highly effective ■From Q1-2015 to Q4-2018, the Group has increased its customer base by an average of 70 thousand customers per quarter Primarily internal collection employing a series of text messages, letters, and phone calls to encourage customer payment ■ Collection processes are initiated in- house immediately when a payment is overdue and most often outsourced to a third party collection company when the payment becomes more than 30 days delayed Impaired loans may also be sold to third parties Note: 1) In some instances, face-to-face identification is required due to lack of technology in some markets 1 Identification and Credit Scoring Digital identification based on hard facts as name and date of birth. Handled via: ■ Mobile technology Online banking, ■ Face-to-face ID verification 2 Effective check of the customer by means of: ■ External data bases with information on credit-worthiness ■ Tested and dedicated internal scoring ■ FICO-tools ■ Self-learning software: Increasing approvals while decreasing charge-offs 3 Credit decision within seconds: ■ Less than 0.1% fraud cases Professional frauds even 0.0% Consumer loan approval rate 2016 14% 2017 15% 2018 13% ferratum 15#16Big Data Optimizes Credit Scoring ■To support the credit scoring system, the Group founded a dedicated technology company, Personal Big Data Oy, for the purposes of further researching and developing the credit scoring technology ■ Credit assessment based on up to 10,000 data points Proprietary and self-learning algorithms based on 10 years of experience ■ Fast and reliable risk assessment through the use of Big Data technology Browser type beoo Social Networks to Ferratum Ferratum™ More than money to everyone Geographic Data fin Browsing behaviour Financial Data Incl. account data via balancion ferratum 16#17Ferratum Group's Typical Customer Employment ■ As at December 2018, the Group had a total customer base of 2.0 million customers¹ Among the Group's customers, a majority of the customers are below 40 years and are predominantly full-time employed ■ 93% of the Group's customers are employed ▪ Loan proceeds are primarily used to pay invoices and consumption ■ Customer acquisition is mainly conducted by modern online marketing, selectively supported by traditional PR ■The Group uses 4 main methods of online marketing namely SEO2, SEM³, affiliate marketing and cooperation ■ Ferratum operates an in house team focusing on increasing the customer base and acquires ~70 thousand new customers per quarter Age Full-time 6.0% 7.0% ■Other 8.0% Pensioner 19.0% 16.0% Unemployed 63.0% Part-time Marital Status 35.0% ■Singles 42.0% Couples without kids Couples with kids 23.0% 18-25 15.0% 25.0% 26-30 31-40 16.0% 41-50 25.0% 51+ Net receivables vs. number of new customers 321 103 294 88 270 257 255 80 77 243 80 70 71 70 225 66 66 73 206 184 65 63 75 154 78 137 122 66 71 81 107 94 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Source: 2014 customer survey. No material change in customer composition according to management. Interim financials for FY 2018 restated. Note: 1) Active and former customers who have been granted one or several loans in the past or has an open mobile account, 2) Search Engine Optimization, 3) Search Engine Marketing Net receivables Number of new customers ferratum Q4-18 17#18Growth driven via the Platform Model Global scalability beyond Ferratum's balance sheet: multiple sources of revenue רל Mobile Financial Platform Model A channel agnostic, flexible customer interface White Label Partners and back-end data engine, supported by a decision making centre and an API integration channel to process third party data: ✓ Fees ✓ Cheap funding sources ✓ Interest on lending products Mobile Financial Platform Ferratum Operating System 1.0 以上 ✓ Current accounts ✓ Deposits ✓ Loans Debit Card Payments Innovation and Widget Partners ☑ Innovation and Widget Partners An ecosystem of services through the integration of third party products and services: ✓ Fees and/or profit sharing ✓ More attractive products Increased customer loyalty International Bank Partners White Label Partners Ferratum's technology and licence platform enables consumer-facing brands to offer financial services: ✓ Fees and/or profit sharing Cheap funding sources ✓ Increased customer base International Financial Partners A franchise model that combines Ferratum's plug and play Mobile Financial Platform and our partners' balance sheets ✓ Fees and/or profit sharing ✓ Access to more markets and customers ferratum 18#19Navigating through regulatory changes Successful track record of adapting to interest cap regulation ■In late 2014, Estonia introduced regulation for an upper limit to the cost of consumer loans ■ While this led to the average yield decreasing, Ferratum started targeting customers with lower credit risk, which in turn had a very positive impact on credit losses Since introduction of the cap in 2014, Ferratum has seen strong profitable growth in its loan book in Estonia ■ In September 2018, the Swedish government introduced an interest/cost cap on consumer loans ■The initial development seen in Q4 2018 shows that the adoption of the interest rate cap in Sweden had little impact on the Group's performance ■ Credit losses are decreasing, new customers are being acquired and both revenues and the loan book is still increasing in Sweden ■ In essence, interest rate caps result in Ferratum tightening its scoring, which leads to better payment behaviour ■ While the revenues per granted loan decrease on average, the impact on profitability is mitigated through the de-risked profile of the customers, resulting in lower credit losses ■ As evident from 14 years of previous experience and a strong track record, Ferratum is well equipped to handle regulatory changes ■ While the operational parameters of a market may change, the Group has proven it is highly flexible and prepared to adapt to a new environment while retaining its growth track and profitability Case study: Introduction of interest rate cap in Estonia Index (Net sales 2014 = 100) Interest cap introduced in Q4 2014 18.9% 26.1% 17.8% 100 85 105 138 128 16 29 39 547 9.2% 373 301 5.9% 219 39 48 2014 2015 2016 Net sales Credit losses Net AR 2017 2018 Credit losses (% of Net AR) 1,089 Estonia shows successful conversion to new interest rate level Case study: Introduction of interest rate cap in Sweden Index (Net sales 2014 = 100) 417 Interest cap introduced in Q3 2018 646 670 566 490 466 6.2% 508 6.9% 7.4% 6.6% 5.0% 6.4% 449 5.9% Aanaanno 100 111 125 121 25 26 29 24 3.5% 155 157 128 140 34 36 45 23 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Net sales Credit losses Net AR Q3-18 Q4-18 Credit losses (% of Net AR) Sweden Q4-18 results indicate successful conversion as well ferratum 19#20Anticipated changes in legal environment Active monitoring and dedicated resources to adapt and respond to regulatory change SWEDEN ■ A new law came into force in Sweden on 1 September 2018 capping effective interest rates for high cost loans at 40%. In line with its overall business strategy, Ferratum has stopped selling microloans in Sweden and switched to products with higher loan principals, which can be offered at lower rates of interest in line with the new capping FINLAND ■ A number of amendments to the Consumer Protection Act with regards to the maximum interest rates that may be charged to consumers, as well as a cap on overall costs, have been approved and will enter into force in September 2019 LATVIA ■ A number of legislative changes were enacted in October 2018, which included rules on creditworthiness assessments. Ferratum offers loans in compliance with these rules, whilst it is also planning further changes in order to comply with additional changes - which will come into force on 1 July 2019 - capping the daily total costs of loans and others which purport to limit certain advertising of loans ROMANIA ■ The National Bank of Romania has adopted adjustments to the relevant debt to income ratio, which were applicable from 1 January 2019. Ferratum has adapted its processes in order to adhere to these legislative changes. In March 2019, Romania's Constitutional Court invalidated a law capping interest rates on retail loans which was to be introduced; Ferratum continues to monitor the situation NORWAY ■ A new law was passed in February 2019 (coming into force in May 2019), the main focus of which are creditworthiness assessments of consumers. Ferratum is working on implementing changes to its processes in order to meet these new requirements POLAND ■ Ferratum is closely monitoring news that new laws will be enacted in Poland in 2019 aimed at regulating consumer lending, primarily in order to ensure Ferratum is ready to implement any changes necessary to continue adhering to the regulatory requirements The Group will continue to monitor the global regulatory environment, in close co-operation with its local advisors, in every country in which it is active with the aim to ensure the Group's ongoing compliance with all applicable laws and regulations ferratum 20#21Leverage opportunities and priorities Operating costs have stabilized while revenue growth is recovering EUR'000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 Growth slowdown Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Management progress to improve performance বাব Accelerate growth of lending by improving risk & increase customer intake Improve conversion rate, scoring & underwriting ■ Processes for increasing customer intake and efficiency✓ Reshape organisation ■ Staff streamlining Strengthen top management ■ Create five cylinders and responsibilities common to every product ■ Lead generation, conversion funnel, underwriting & collections, CRM, product & pricing Rebalance resources ■ Focus on lending in existing markets ■ More resources allocated to risk management and automation Review geographies for profitability Considering withdrawal from 1-2 non-performing countries ongoing Revenue Total costs ferratum 21#22Risk modelling review programme Programme is substantially completed 2018 Scoring Risk & IT Risk & Marketing 2019 Intended benefits in 2019: ■New heads of data science and credit management appointed ■ All credit decisions under central monitoring ■ Score cards for new and existing customers reviewed ■1,000 credit policy rules reviewed (mostly completed) ■ Mid term optimization plan defined in order to even exceed current status ■ New scorecard implementation tool implemented (Score Mada) ■New scorecard implementation process defined ■ Documentation of risk relevant features in IT systems completed Strong score card quality monitoring established ■New Collection tool selected (Fico) 5 cylinder model established - improving handshaking between risk and other functions, especially marketing and sales ■ Increase number of new customers ■ Increase active customer base Optimize cost benefit of customer acquisition ■ Increase the quality of the credit portfolio ferratum 22#23Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 23#24Overview of Product Portfolio Revenue Split and Structure ■ Microloans have historically been the core product since start of operations in 2005 however, with banking license in place since 2012, there has been more focus on traditional consumer loans Currently the Issuer takes deposits in Sweden, Germany, Norway, France and Spain. Average interest is 0.6% ■ Credit limit represents 47.9% of the loan portfolio and 50.5% of revenues ■ In 2016, the Group launched its Mobile Bank platform offering interesting growth opportunities, currently active in 5 markets Loan Portfolio Breakdown by Product, Dec-18 2.4% 9.1% 15.2% 47.9% ■Microloan PlusLoan 25.3% Credit Limit Business (SME) Revenue Products Share Revenues by Product (€,000) 2017 529 Primeloan (incl. 0.6% Mobile Bank)² 2018 +178% y-o-y 1,468 2017 13,135 Business (SME) 8.0% 2018 21,008 +60% y-o-y 2017 Credit Limit 50.5% 2018 2017 PlusLoan 25.0% 2018 2017 Microloan 15.9% 2018 Average Amount and Duration of Different Loan Products¹ Active Markets Average amount Average loan term 9 2 (5) PrimeLoan Business (SME) Credit Limit 103,774 +28% y-o-y 10 132,321 PlusLoan Microloan 9 EUR 6,004 4.9 years EUR 13,503 420 days EUR 1,269 n/a EUR 753 EUR 210 355 days 29 days 60,315 +9% y-o-y 65,641 43,886 41,709 -5% y-o-y 13 Source: Company filings. Note: 1) Information as of December 31, 2018, 2) Mobile Bank, FerBuy, Primeloan and Ferratum P2P ferratum 24#25Product Area - Credit Limit Service Offering ■ The Credit Limit product was launched in Finland in June 2013 and is currently offered in 10 of Ferratum Group's markets, including in the Nordics, Estonia, Latvia, Spain, Czech Republic, the UK and in Brazil ■ Credit limits offered by Ferratum are up to EUR 3,000 and the product offering is similar to a flexible revolving overdraft facility ■ Customers can withdraw money within a certain limit over a month's period and choose which amount to pay back at the end of each month. Monthly minimum instalments covers interest and some amortization is required Hence, the product offers a very flexible solution from a customer point of view, enabling customers to withdraw and repay in accordance with their cash flow situation ■ Draw downs and repayments are allowed at any number of times until the expiration of the arrangement ■ As at Dec-18, the average amount loan amount was EUR 1,269 ■ The product segment has seen a rapid growth from initiation Credit Limit - Share of Revenue 50.5% Credit Limit - Revenue and Contribution (EUR thousands) 41% p.a. 132,321 103,774 ■ Credit Limit comprised nearly 48% of the total loan portfolio as at Dec-18 and generated half of the Group's revenues for FY 2018 66,444 Revenues 24% 21% 19% Gross contribution margin (%) ■ The Group is planning on expanding the product offering to more of its markets Source: Company filings FY 2016 FY 2017 FY 2018 ferratum 25 25#26Product Area - Microloans Service Offering ■ Short-term microloans with a nominal value below EUR 1,000 have historically been the Group's core product since it started its operations in 2005 However, the Group has decreased its focus on microloans over the last couple of years with the product type comprising 9.1% of the total loan portfolio as at Dec-18 while representing 15.9% of revenues for FY 2018 ■ This can be compared to 2016, when Microloans accounted for 34% of revenues ■ Microloans are currently offered in 13 countries ■ Microloans typically range between EUR 25-1,000 with durations of 7-90 days, depending on the loan amount and regulatory framework of the customer's country ■ Average loan amount totalled EUR 210 with an average duration of 29 days as at Dec-18 ■ Microloans are facilitated through the Group's mobile phone application and customers are in most cases able to obtain loans instantly ■ Given the varied regulatory requirements, payment cultures and overall credit risks within different markets, the Group applies customized interest rates, fee structures and terms and conditions depending on market ■ Therefore, specific provisions for customer default, loan modification, technical repayment processes and additional customer obligations differ from country to country ■In 2018, Microloans were discontinued in Canada and Sweden following the Group's strategy, as higher customer lifetime value can be to achieved with other products Microloans - Share of Revenue 0 15.9% Microloans – Revenue and Contribution (EUR thousands) -11% p.a. 52,837 43,886 41,709 19% Revenues 8% ■Gross contribution margin (%) 5% Source: Company filings FY 2016 FY 2017 FY 2018 ferratum 26 26#27Product Area - PlusLoan Service Offering ■ PlusLoan was included into the product offering in 2013 and serve to complement the Microloan business ■ The product is offered to selected customer groups only and application is done separately through an online application ■ PlusLoans are primarily targeted to existing customers with a strong track record of repayment ability ■ PlusLoan is a more flexible loan product outside the typical range of Microloans ■ As of FY 2018, PlusLoan constituted 25.3% of the Group's total loan portfolio and contributed 25.0% of revenues ■ PlusLoans are offered in larger amounts, typically between EUR 300-5,000 with maturities of 2-36 months ■In FY 2018, the average loan amount and tenor amounted to EUR 753 and 355 days, respectively ■ PlusLoans are practically regular instalment loans, further distinguishing them from the Group's Microloans ■ As the product segment is rapidly growing, the margins are diluted by frontloaded credit losses and marketing expenses ■ PlusLoans are currently offered in 9 markets PlusLoan - Share of Revenue 0 25.0% PlusLoan - Revenue and Contribution (EUR thousands) 47% p.a. 65,641 60,315 20% 30,232 9% 13% Revenues ■Gross contribution margin (%) Source: Company filings FY 2016 FY 2017 FY 2018 ferratum 27#28Product Area - Business (SME) Service Offering ■In 2015, business lending to Small and Medium-sized Enterprises (SMEs) were introduced in Finland and Sweden " Currently, Ferratum Group offers its business lending services in 9 countries, including Sweden, Finland, Lithuania, Denmark, the UK, the Netherlands, Czech Republic, Poland and Australia ■ The business offering offers established small businesses, with a strong track record of at least two years, loans with a term of six to 18 months ■ Loans can be up to EUR 250,000 and can be applied through an online application process Average loan amount and tenor amount to EUR 13,503 and 420 days, respectively ■Loan proceeds are often used to finance working capital and bridge financing Business (SME) - Share of Revenue 8.0% 0 Business (SME) – Revenue and Contribution (EUR thousands) Source: Company filings. Only for Ferratum Group. Not part of Ferratum Bank's product offering 4,251 9% 122% p.a. 21,008 13,135 20% Revenues 17% ■Gross contribution margin (%) FY 2016 FY 2017 FY 2018 ferratum 28#29Product Area - Mobile Bank¹ Service Offering ■Mobile Bank includes the Group's Mobile Banking operations (launched in 2016), FerBuy (to be discontinued), Primeloan (started in 2017) and Ferratum P2P ■The Group's mobile banking offering is currently available in five countries in Europe, aiming to offer customers a simple, real-time, global and mobile banking solution allowing customers to have current accounts, savings accounts and term deposits with Ferratum ■ Customers receive a free contactless debit card, allowing customers to withdraw cash across Europe in any currency ■ In addition, a current account with Ferratum supports multi currencies, allowing customers to move money between countries in real-time at attractive FX-rates and enabling cross-boarder transactions ■ Ferratum's mobile offering will be renewed during 2019, with new services to be introduced through a new enhanced Mobile Bank app. Customers will eventually have intelligent financial services (loans, credit, savings, investments and payments) available to address all financial matters, with the services provided by Ferratum and Ferratum's partners ■Ferratum P2P lending and investment platform will be restructured during 2019 Mobile Bank - Share of Revenue 0.6% Mobile Bank – Revenue and Contribution (EUR thousands) 101% p.a. 1,468 ■ The platform will be closed to new retail customers, with existing principals and accrued interest bought back, and relaunched to serve institutional investors in the first half of 2019 529 ■ In 2017, Ferratum launched Primeloans to Finnish private customers, with a subsequent successful rollout in Germany in October 2018. This adds to the company's growing suite of consumer lending products 364 ■ Under this product category, Ferratum competes with larger banks to offer loans in the range of EUR 3,000-20,000 with maturities ranging from 1-10 years Source: Company filings Note: 1) Includes Mobile Bank, Ferratum P2P, Prime Loan and FerBuy (FerBuy is to be discontinued). Only for Ferratum Group. Not part of Ferratum Bank's product offering FY 2016 FY 2017 FY 2018 Revenues ferratum 29#30Product Offering per Market Western Northern Rest of the World Eastern Europe Europe Europe Microloan PlusLoan Credit Limit ✓ SME Mobile Bank Primeloan P2P ✓ Product area Finland Sweden Denmark Norway France Germany Netherlands Spain UK Bulgaria Croatia Czech Republic Estonia Latvia Lithuania Poland Romania Russia Slovakia Australia Brazil Canada Mexico New Zealand Nigeria ✓ ✓ ✓ Live markets 13 9 10 9 5 2 Notes: P2P offering discontinued in 2018 - to be restructured and relaunched in 2019 0 ferratum 30#31Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 31#32Asset Quality - Breakdown of Receivables Comments ■ Due to the stringent loan application procedure and credit scoring applied by the Group, Ferratum ensures high quality customers from the outset ■ Also, the Group constantly reviews its receivables portfolio and receivables that are overdue are impaired in accordance to a statistical model, described on the following slide ■ As of December 2018, gross receivables amounted to EUR 468 million while the net amount on balance sheet amounted to EUR 321 million Non-performing-loans (NPLs), defined as receivables that are more than 90 days past due, amount to 17.8% of net receivables ■ Ferratum has been able to improve its asset quality due to improved and rigorous credit scoring over the years, however the adoption of IFRS 9 from 2018 had an impact on the Group's impairment and credit loss models, making the NPL evolution of FY 2018 incomparable to earlier years (see slides 54-56 in appendix for further information) ■ Adoption of IFRS 9 led to an instant additional EUR 21 million provision, as net receivables decreased from IAS 39 compliant EUR 259 million to IFRS 9 compliant EUR 236 million ■The NPL ratio would be significantly lower if taking into account that due to focus on short term lending the yearly lending volume is much higher than the portfolio on balance at year end Due to small average amounts, loans that are overdue by 180 days still have relatively high market values and Ferratum seeks to sell older NPL portfolios and thus limit the volume in this overdue bucket Collection processes are initiated immediately when a payment is overdue ■ In the first 60-90 days primarily internal soft collection employing a series of text messages, letters, and phone calls to encourage customer payment " After the first 60-90 days, external debt collection partners take over collections Impaired loans may also be sold to third parties through forward flow in Finland, Sweden, Estonia and Latvia or through auction processes Source: Company filings. Interim financials for FY 2018 restated. Note: Adoption of IFRS 9 makes historical figures non-comparable to FY 2018 figures due to varying credit loss provisioning models Portfolio Ageing Profile (net carrying value) (EURm) IAS 39 IFRS 9 Non-comparable to historical figures % of current portfolio 320.5 15% 47.0 257.4 236.5 10.0 3% 16.7 11.7 71.8 22.2 30.5 22% 184.3 8.7 51.7 15.3 61.5 106.8 10.9 6.2 12.0 206.8 60% 191.7 146.1 145.6 133 35.0 77.7 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 1-Jan-18 Not due 1-90 days due ■91-180 days due ■> 181 days due 31-Dec-18 NPL Evolution (% of NPLs of Net Receivables) 50% 37% 40% 33% 29% 30% 20% 10% 0% 31-Mar-14 Adoption of IFRS 9 Non-comparable to historical figures 21% 21% 19% 16% 16% 14% 14% 14% 12% 11% 13% 12% 11% 17% 18% 18% 18% 18% 30-Jun-14 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15 31-Dec-15 31-Mar-16 30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 30-Sep-17 31-Dec-17 1-Jan-18 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18 ferratum 32#33Asset Quality - Impairment Policy and Credit Losses Comments ■ Overdue receivables are impaired in accordance to a mathematical model (Markov Chains) based on actual performance of the loan portfolio ■ All statistically expected credit losses based on this model (expected loss) are booked when paying out a loan (group average 6.8%) (IFRS 9 compliant) ■ Based on this risk provisioning model, credit losses come when paying out a loan and income on the longer term periods only over the term of the products ■In total, the Group has 31.5% in reserves of gross receivables as of December 2018 ■ Breakdown over impairments per basket of receivables is expressed in the table on the right ■ The reserving ratio (impairments compared to gross receivables) increases as the likelihood of recovery decreases when the receivables are more overdue ■ When a receivable is impaired, the receivable's carrying amount is reduced to the receivable's recoverable amount ■ The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows ■ The amount of the loss is recognized in profit or loss as an impairment If the amount of the impairment loss decreases, the previously recognized provision for impairment is reversed by adjusting the allowance account through profit and loss for the year Quarterly gross impairments as percentage of gross receivables per corresponding point in time have been fairly stable throughout the last few years, but has shown a slightly decreasing trend in 2018, ending at 4.9% for Q4 2019 " Quarterly impairments for FY 2018 are not fully comparable to earlier years due to adoption of IFRS 9 Impairment per Basket of Receivables, December 2018 In EUR '000 GBV Provision for Impairments NBV Coverage ratio (%)¹ Not overdue 205,616 (13,898) 191,718 6.8 1-90 days due 92,961 (21,127) 71,835 22.7 91-180 days due 23,234 (13,252) 9,982 57.0 >181 days due 145,998 (98,996) 47,002 67.8 Total 467,811 (147,273) 320,538 31.5 Gross Impairments as % of Gross Receivables² Adoption of IFRS 9 Non-comparable to historical figures 6.4% 6.3% 6.3% 6.3% 5.8% 6.1% 6.1% 6.3% 6.3% 6.3% 5.8% 5.8% 5.7% 5.3% 5.2% 5.0% 5.3% 4.5% 4.8% 4.9% ferratum Source: Company filings. Interim financials for FY 2018 restated. Note: 1) Impairments / GBV (gross book value). 2) Adoption of IFRS 9 makes historical figures non-comparable to FY 2018 figures due to varying credit loss provisioning models 33#34Capital Ratio & Liquidity Comments ■ Ferratum Group monitors its capital on the basis of its gearing ratio, calculated as net debt to equity ■ As the deposit taking business has expanded, the borrowing base has increased rapidly hence affecting total equity in relation to net debt ■In 2015, the Group went public resulting in net proceeds of EUR 46.2 million ■The adoption of IFRS 9 had a direct impact on the Group's equity, as the required changes to the credit loss provision model led to an additional provision of EUR 20.9 million, of which the impact on equity was a negative EUR 15.1 million ■ No transition rule applicable as for traditional banks; the entire adjustment was taken at cost immediately ■ The increase in cash over the past years is stemming primarily from the increase in deposits, with EUR 183 million held in customer deposits as of December 2018 ■ Cash position was also strengthened as Ferratum issued a EUR 100 million senior unsecured bond in May 2018, which led to a surge in liquidity in Q2-2018 Hence, Ferratum Group has ample available liquidity to support the business of EUR 116 million as of December 2018 Liquidity Evolution (EURM) Equity Ratio Ferratum Group 63.3% 55.4% 39.5% 34.5% 28.3% 0.0% 28.9% .29.9% 26.9% 29.7% 31.3% 28.8% 28.1% 27.9% 24.1% 21.8% 21.7% 21.5% 18.9% 19.3% Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Mar-18 Jun-18 Sep-18 Equity ratio Net equity ratio Total Equity in Relation to Net Debt (EURM) 2.46 2.33 2.35 Post Ferratum IPO Dec-18 2.56 2.58 2.47 2.20 1.90 1.53 277.3 251.7 230.9 199.5 209.8 171 159 132 135 116 116 134.8 79 72 73 65 45.0 39 23 31 0.58 13 10 9 8 17 11 39 50.3 105.2 95.4 93.4 98.4 107.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 30.6 13.2 Dec-12 Dec-13 38.6 87.9 15.7 21.4 77.6 Dec-14 Dec-15 2014 2015 2016 2017 2018 Total Equity Dec-16 Dec-17 Net Debt Mar-18 Jun-18 Sep-18 Dec-18 Net debt to equity ratio Source: Company filings. Interim financials for FY 2018 restated. ferratum ד 34#35Overview of Funding Weighted average cost of funding 8.62% 8.02% 5.25% 3.11% 3.62% Comments ■ The Group's current funding consists of customer deposits and bonds ■ As the refinancing is completed, the Group will obtain a simpler and more streamlined capital structure ■In addition to bonds and customer deposits, Ferratum Group also has a EUR 35 million credit line with Nordea to support expansion of which EUR 20 million was drawn as at December 2018 ■ The Group started offering deposits for its customers in Sweden in January 2016 and has now rolled out the offering in Germany, Norway, France and Spain ■ Customer deposit will provide the principle source of financing for the operations going forward Historically Ferratum Bank sought a diversified funding mix of deposits and institutional bonds by issuing bonds itself. However, going forward the intention is that all capital market indebtedness of Ferratum Group is raised by the Issuer and transferred within the Group as intra-group loans ■The Group has been successful in decreasing its cost of capital in recent years primarily due to offering deposits, however the average interest slightly increased in 2018 to 3.62% due to the EUR 100 million bond issued in May 2018 ■ Interest and tenor on the Group's customer deposits varies but averages around 0.6% with an average tenor of a few months 2014 2015 2016 2017 2018 Overview of current funding structure 50% 7% 11% 5% Ferratum Capital Germany 4.875% 2019 | Ferratum Bank 3mE+6.25% 2020 Ferratum Capital Germany 3mE+5.50% 2022 27% Nordea Credit Line Deposits Debt Maturity Schedule To be refinanced 40 25 100 100 New bond issue - Ferratum Capital Germany 2023 Ferratum Capital Germany 3mE+5.50% 2022 Ferratum Bank 3mE+6.25% 2020 Ferratum Capital Germany 4.875% 2019 2019 2020 2021 2022 2023 ferratum 35 55#36Scope to further improve cost of capital over time... ... by migrating more countries under Sphere I operations SPHERE I OPERATIONS Countries covered by Ferratum Bank p.l.c.'s EU banking licence ferratum business + SPHERE II OPERATIONS Countries/operations not currently utilising Ferratum Bank p.l.c.'s EU banking licence Potential Sphere I Operations 0 93.5 142.6 FINANCING SPLIT 2018 (EUR million) Migration targeted in 2019 FINANCING SPLIT 2018 (EUR million) 22.1 183.4 Loans Receivables Cash Loans Receivables Cash Ferratum Bank 3mE+ 6.25% 2020 Deposits from Customers 177.9 100.0 ■Ferratum Capital Germany 4.875% 2019 ■Ferratum Capital Germany 3mE +5.5% 2022 40.0 Assets Liabilities 25.0 Assets Liabilities ferratum 36#37Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 37#38Ferratum Group Income Statement Comments ■ Revenue increased by 18% to EUR 262 million in FY 2018 from FY 2017 Operating profit was recorded at EUR 37.8 million Impairments on loans for FY 2018 amounted to EUR 88 million, increasing from EUR 76 million in 2017 both due to an increased receivables base as well as adoption of IFRS 9, resulting in changes to the provisioning models Despite the stringent changes in the credit loss provisioning models, operating margin stayed flat in 2018, standing at 14.4% of revenues Following an initial slowdown of growth in H1 2018, the Group initiated a series of management actions to improve performance, including the strengthening of top management, staff streamlining, rebalancing of resources to prioritise enhanced risk management and the automation of lending processes in existing markets ■ As Ferratum Group has expanded, the major cost items have increased in line with revenue Impairments, personnel, and selling & marketing amount to 34%, 17% and 16% of revenues, respectively and together constitute 77% of operating costs Operating profit and margin (EUR thousands) 15.0% 12.6% 14.8% 13.7% 14.4% 14.4% Income Statement EUR '000 Revenue Other Income Impairments on loans. Operating expenses Personnel expenses 2018 262,148 2017 221,638 2016 154,128 2015 2014 111,008 70,508 241 534 64 47 157 -88,496 -75,629 -47,964 -34,687 -20,372 -43,799 -35,375 -24,761 -17,010 -11,768 Selling and marketing expenses -41,388 -37,184 -29,918 -16,200 -9,608 Lending costs -12,971 -10,145 -8,001 -7,116 -4,569 Other administrative expenses -2,350 -2,205 -2,204 -5,097 -3,033 Depreciations and amortisation Other operating expenses -5,223 -2,811 -1,547 -1,309 -628 -30,363 -26,986 -18,655 -13,158 -10,076 Operating profit 37,799 31,837 21,142 16,478 10,611 Financial Income 124 97 161 95 99 Foreign exchange effects -2,787 384 -875 -97 27 Finance costs -12,803 -9,075 -5,700 -4,057 -4,207 Net finance costs -15,466 -8,594 -6,414 -4,059 -4,081 Profit before Income Tax 22,333 23,244 14,728 12,419 6,531 Income tax expense -3,060 -3,185 -1,768 -1,491 -911 Profit for the period 19,274 20,059 12,960 10,928 5,619 Source: Company filings. Operating Profit Return on equity 18% 21% 16% 22% 30% 37,799 31,838 Operating margin Interest coverage ratio 2.8x 4.0x 3.5x 4.4x 2.7x 21,142 16,478 7,329 10,611 2013 2014 2015 2016 2017 2018 ferratum 38 88#39Ferratum Group Balance Sheet Comments ■ In February 2015, the Group received net proceeds from its IPO of EUR 46.2 million, which is the primary driver of the increase in equity ■The IPO is considered to be a very significant milestone for Ferratum Group and is certain to strongly support Ferratum Group's further development ■Net equity ratio and net debt to equity amount to 27.9% and 2.58, respectively as at 31 December 2018 ■ The vast majority of Ferratum's assets are built up of loan receivables from customers, with net receivables amounting to EUR 321 million in December 2018 ■ The increase in liabilities between 2018 and 2017 is primarily driven by the EUR 100 million bond issue by Ferratum Capital Germany in May 2018 Total equity and liabilities (EUR thousands) Balance Sheet EUR '000 Assets Non-current assets Property, plant and equipment Loan receivables Current tax assets Total assets 29.9% 2.35 63.3% 39.5% 34.5% 1.90 1.53 27.9% 2.58 Net equity ratio Net debt 277,253 Total Equity 199,520 0.58 134,751 Net debt/Equity 45,037 50,336 105,243 107,380 77,638 87,875 21.443 2014 2015 2016 2017 2018 Source: Company filings. Note: 1) In previously published reports "Deposits from customers" were included in borrowings 2018 2017 2016 2015 2014 4,155 3,482 2,761 560 294 Intangible assets 30,227 20,037 12,736 8,232 4,383 Government stocks 8,533 8,851 11,450 Deferred income tax assets 10,622 3,757 3,480 2,692 2,711 178 Total non-current assets 53,714 36,127 30,427 11,484 7,388 Current assets Accounts receivable - lending business 320,538 257,406 184,346 106,758 61,529 Other receivables 9,399 10,554 7,298 4,309 2,194 Derivative assets 21 961 156 519 555 124 668 Cash and cash equivalents 115,559 131,832 Total current assets 446,478 400,468 73,059 265,258 17,452 128,643 8,026 72,417 500,192 436,595 295,685 140,127 79,805 Equity and liabilities Equity attributable of the parent Share capital 40,134 40,134 40,134 10,134 7 Treasury shares -142 -142 -142 -142 -142 Reserves -2,211 -2,240 -1,202 -638 -392 Unrestricted equity reserve 14,708 14,708 14,708 44,708 2,373 Retained earnings 54,892 52,783 34,377 23,577 12,305 Total equity 107,380 105,243 87,875 77,638 21,443 Liabilities Non-current liabilities Borrowings 137,695 64,049 72,246 48,739 28,719 Other Payables 0 0 0 4 11 Defrred income tax liabilities 581 118 0 184 155 Total non-current liabilities 138,276 64,167 72,246 48,927 28,885 Current liabilities Current tax liabilities Deposit from customers Borrowings Derivative liabilities. Trade payables 3,372 183,405 44,882 479 1,867 1,143 1,002 1,634 174,301 101,436 69,741 18,469 3,543 20,233 790 182 10,522 9,838 4,958 2,727 4,401 Other current liabilities 11,877 10,648 9,376 6,290 3,209 Total current liabilities Total liabilities 254,536 267,185 135,564 13,562 29,477 392,812 331,352 207,810 62,489 58,362 Total equity and liabilities 500,192 436,595 295,685 140,127 79,805 ferratum 39#40Ferratum Group Cash Flow Statement Comments ■ As of the end of FY 2018, the Group's cash position stood at EUR 115.6 million, with the decrease from 2017 stemming primarily from strongly increased lending ■ Net cash from operating activities has grown from EUR 46 million in 2015 to EUR 122 million in 2018 Impairments on loans is a non-cash item as according the Group's credit policies, expected credit losses are recognized in the income statement when paying out a loan ■ As the Group's receivables portfolio has increased, actual loan write-offs have also increased from EUR 30 million in 2015 to EUR 40 million in 2018 ■ Net investments have been steadily growing in the last couple of years, however still constituting a low percentage of sales ■ Investments in 2018 were primarily related to purchase of tangible and intangible assets with the Group's IT platform and infrastructure of key focus Net cash from operating activities¹ (EUR thousands) Cash flows from operating activities Profit/loss for the period Adjustments for: Depreciation and amortisation Finance costs, net Tax on income from operations Transactions without cash flow Trade payables and other current liabilities Interest paid Cash flow statement EUR '000 2018 2017 2016 2015 19,274 20,058 12,961 10,928 5,223 2,811 1,547 1,309 15,466 8,594 6,414 4,059 3,060 3,185 1,768 1,491 2,429 1,263 399 -324 Impairments on loans 88,496 75,629 47,964 34,687 Working capital changes: Other current receivables and government stocks 1,608 -813 -16,848 -2,115 1,543 6,991 4,404 939 -11,176 -6,892 -4,434 -3,313 82 41 163 20 -385 -121 -3,994 -1,720 -3,094 -1,206 122,010 109,147 50,859 46,354 9,104 72,865 98,426 873 -131,568 -89,233 -91,120 -50,179 -39,909 -59,456 -34,431 -29,737 -40,363 33,323 23,734 -32,689 Net cash from investing activities -16,802 -11,329 -8,266 -5,450 Cash flow from financing activities Proceeds from share issue Interest received Other financing items Income taxes paid Net cash from operating activities before movements in loan portfolio and deposits received Deposits received Movements in gross portfolio Fully impaired portfolio write-offs Net cash from operating activities 46,354 50,859 2015 2016 109,147 2017 Source: Company filings. Note: 1) Before movements in loan portfolio and deposits received 48,171 122,010 Expenses related to share issue Proceeds from short-term borrowings Repayment of short-term borrowings Proceeds from long-term borrowings Repayment of long-term borrowings Dividends paid / distribution of funds Net cash from financing activities -1,923 20,000 24,817 -24,983 -100 -198 -17,563 98,013 35,000 49,338 20,020 -45,138 -18,133 -6,125 -3,890 -2,594 -2,158 -1,079 44,003 38,990 40,857 47,626 2018 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Exchange gains/(losses) on cash and cash equivalents Net increase/decrease in cash and cash equivalents Cash and cash equivalents at the end of the period -13,162 60,984 56,325 9,487 131,832 73,059 17,452 8,026 -3,111 -2,212 -717 -59 -13,162 60,984 56,325 9,485 115,559 131,831 73,060 17,452 ferratum 40 40#41Summary and Outlook ■ Ferratum has experienced strong revenue and EBIT (EUR 000s) profitability growth over the last few years Through its increasing base of customer deposits, the Group has a well funded balance sheet with a decreasing cost of capital ■ Risk procedures have been improved and overall cost base has been decreased ■ Future focus is on EBIT development and profitability ■ For FY 2019, Ferratum expects EBIT to exceed EUR 45 million 21,142 16,478 31,838 37,799 Outlook EBIT to exceed EUR 45 million > 45,000 2015 2016 2017 2018 2019 ferratum 41#42Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 42 22#43Competitive Landscape ■ The EU consumer credit market is highly fragmented with many new suppliers entering the small consumer loan market ■ Mobile consumer loans is the newest consumer credit market segment. Mobile lending is a modern way of granting small loans by utilizing mobile telecommunications and online technology to enable fast, easy, and confidential loan services " Competition in the mobile consumer loan market has increased steadily as mobile loan products have become established as a reliable source of consumer financing ■ Ferratum's primary focus is the mobile banking market where key competitors are often small local microloan companies with a limited customer database and limited international activities. In addition, the Group also faces competition from larger consumer credit companies which offer consumer lending and deposit at higher rates than traditional retail banks ■ There are a wide range of smaller competitors which operate locally in Europe and Asia Pacific ■ Some markets such as the UK have dozens of small competitors while countries such as Germany, which have higher regulatory requirements and require a banking license for a consumer loan business, have much fewer direct competitors which operate locally Segment Small Business/ Consumer Loan Market Mobile Banking Market Comments Companies principally compete with traditional banks which provide liquidity and working capital facilities for small companies as well as with certain consumer finance companies which are also starting to approach this market Competitors operating in the consumer credit market and small business loan market have created a variety of products in response to market demand that reflect the financial solvency, needs, and creditworthiness of customers Traditionally, customers could access their bank account via their bank's web page through a web browser on a mobile device or via text message ■ As a result of the fast growth of mobile applications, traditional banks have also developed mobile applications that can be downloaded to a mobile device and used to access account information and functionality ■ The development of mobile devices in general is an indicator for the mobile banking market potential Companies often offer a broad product portfolio, such as payday loans as well as pawn broking Example of key players fe Ferratum™ mare than my se .al Kreditech fe Ferratum™ vivus.fi DFC GLOBAL CORP marginalen bank enova. are than most ever Klarna adyen Santander Citibank Broad Product Portfolio ■ The upper segment of the market is controlled by the consumer finance divisions of global banks, which offer loans in excess of EUR 2,000 or often EUR 5,000 (Ferratum's Prime Loan product is within this range) Swedbank fe Ferratum" more than money t Source: European Central Bank, Oliver Wyman ferratum 43#44-2% Dec-10 Source: European Central Bank, Eurostat 0% Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 GDP (growth %, y-o-y) Jun-14 12% 19.6% 10.1% 10.8% 10.7% 9.9% 10% 9.0% 8.2% 10% 7.2% 9% 6.6% 8% 8% 6% 2.5% 4% 2.0% 2.3% 2.6% 2.1% 1.2% 1.4% 7% 0.8% 2% -0.6% 6% Dec-14 Macroeconomic Key Figures and Forecasts Macroeconomic Developments in Europe ■ EU GDP growth weakened in late 2018 partly due to regulatory bottlenecks experienced by car manufacturers, leading to a sharp reduction of production. ECB expects the weakening to be largely temporary and projects that growth will subsequently recover ■ Over medium term, the fundamentals related to the accommodative monetary policy, improving labour conditions and stronger balance sheets support continued expansion ■ Unemployment is projected to continue to decrease over the projection horizon, although at a slightly lower rate than previously expected, mainly reflecting the more subdued economic recovery Wage moderation and past labor market reforms are seen as supporting employment growth ■ The labour force is expected to expand, reflecting the continued influx of refugees and the fading of discouragement effects EU28 GDP growth and Unemployment Rate Decreased Consumer Credit Borrowing Rates ■ Since the financial crisis, interest rates have decreased significantly creeping down close to zero and negative in some instances ■ Interest rates in the Euro zone are expected to remain low ("lower for longer") going forward ■ The low interest rate environment has had a negative effect on traditional banks' earnings, leading to cost cuts including laying of personnel and closing down branches ■ The annual percentage rate of charge (APRC) for consumption loans in the Euro zone has moved in correlation with the Euro area's rate applied to Main Refinancing Operations (MRO) ■ In addition, the emergence of alternative providers following the recent Fintech boom, has enabled consumer to borrow on more favourable terms APRC value in the Euro area – Loans for consumption Jun-15 Dec-15 Jun-16 Unemployment rate (%) Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 5% Dec-03 APRC value Loans for consumption ferratum 44#45Consumer Loan Stock Stable European Consumer Loan Stock ■ The consumer credit stock in the EU has been relatively stable for the past five years, although credit for consumption has steadily been increasing at a 3.2% CAGR since 2013 Many authorities in respective European countries are reporting that demand for consumer credit has been increasing both in terms of volume and value of loans. ■This is suggested to be an effect of decreasing interest rates and sustained growth of private consumption, but also stricter amortising requirements on mortgages, which has created additional pressure on consumers' disposable income ■ The European consumer credit market is expected to continue to increase due to: ■ Overall economic improvement and rise in domestic consumption Banking groups' refocusing on the consumer credit market Outstanding consumer credit in the EU28, 2013-2017 (EUR bn)¹ Strong activity in the Nordics ■ Ferratum's core market, the Nordics, has experienced favourable growth in consumer lending in the last couple of years ■ Overall, activity in the Nordics stayed strong in 2017, except for Denmark, where activity has been slow due to a government initiated debt-reduction strategy in 2009 ■ With the exception of Sweden, where the savings rate is historically high, the Scandinavian countries had higher per capita outstandings than average for Europe ■ The outstandings/consumption ratio also reflects contrasting realities: while outstandings made up nearly 20% of end consumption in Norwegian households, this ratio fell to 10% for Sweden Outstanding consumer loans in the Nordics, 2013-2017 (EUR bn)² 1,750 1,736 1,779 1,762 1,786 48 45 41 42 39 3 938 917 910 886 865 8 8 ७ Denmark 11 Norway 7 Other lending 15 13 14 15 Finland 13 812 819 869 876 921 Credit for consumption Sweden 18 20 20 21 22 23 2013 2014 2015 2016 2017 Source: European Banking Authority, Norwegian Financial Supervisory Authority, Swedish Financial Supervisory Authority, Finlands Bank, Statistics Denmark Note: 1) Other lending refers to consumer loans for e.g. business or education. 2) Variations exists in the definition of consumer credit in the Nordics (e.g. statistics for Denmark only include consumer credit provided by non-banks) 2013 2014 2015 2016 2017 ferratum 45 55#46Smartphone penetration and mobile banking usage Smartphone usage has grown substantially in the last couple of years, with global shipments expected to reach 1.4 billion units in 2018 ■ Growth in annual shipments has been stagnating since 2016, but the growth track is expected to recover in the coming years ■ Recent forecasts assume that total connections will grow to 6 billion over the next 6 years, equalling two thirds of all mobile connections in 2020 By 2020, smartphones are assumed to be the primary internet connection tool as well ■In addition, the usage of smartphones is expanding to all social classes and smartphone usage is expected to increase significantly in lower income segments and emerging markets Many smartphone users from lower income segments are currently underbanked and only use bank services for example to receive their salaries ■ As a result of the technological development in recent years, mobile banking has grown rapidly ■ Traditional banks have developed applications for smartphones and tablets to offer customers easy access to manage their accounts and payments via mobile ■ Number of mobile banking users globally reached 1 billion in 2017 and is expected to almost double until 2019 ■ The usage of mobile banking applications is mostly widespread within the younger population with most frequent users being aged between 25-34 ■ 42% of all banking customers within this age bracket are expected to use mobile banking applications in 5 years time compared to 21% per 2017 Global smartphone shipments (million units) Forecast 1,574 1,437 1,473 1,462 1,421 1,302 1,019 2013 2014 2015 2016 2017 2018E 2022E Global mobile banking users (billion people) +192% 0.8 0.6 +119% 1.0 1.8 2013 2014 2017 2019E Source: McKinsey, KPMG, Statista ferratum 46 46#47Fintech Market Overview ■The Fintech industry is currently experiencing very beneficial market dynamics, with several new technologies disrupting traditional financial market services ■ Fintechs are expected to have an aggregate market share of up to 5% by 2020 of the total financial sector ■ There have been substantial investments in Financial Technology in the last couple of years, with $27bn equivalent invested in 2017 globally ■ The geographic areas that are exhibiting the largest growth is the US coupled with Europe ■ Smart phone penetration has fuelled the emergence of Fintechs as smart phones have become an integral part of peoples life and people (millennials in particular) are more open to new technologies Global Investments and no. of deals in Financial Technology ($bn) 2,694 1,805 1,194 949 $bn investments 812 27.4 638 476 21.2 23.3 338 1.9 13.3 # of deals 2.5 3.2 4.8 2010 2011 2012 2013 2014 2015 2016 2017 Areas of Disruption Percentage of FinTech Survey participants 80% 70% 60% 50% 40% ■ The areas that are expected to be most 30% disrupted by Fintechs are Consumer banking, 20% Fund transfer and Payments, Wealth Management and SME banking 10% 0% Consumer Fund transfer Investment & SME banking: Brokerage banking & payments wealth services management Insurance Commercial banking Insurance intermediary Market operators & exchanges Fund operators Ferratum core product offering Investment Reinsurance banking Source: McKinsey, PwC ferratum 47#48Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 48#49Ownership and Share Price Development Shareholder overview as at 28 February 2019 33.82% 5.09% 5.37% 0.67% Share price and traded volume | Feb 2015 to Mar 2019 Price (EUR) Volume (m) 400,000 Jorma Jokela Ferratum Oyj 350,000 HSBC 55.05% ■Dorval 300,000 250,000 Free float 200,000 150,000 100,000 ■ Founder and CEO, Jorma Jokela, is the largest shareholder, owning 55% of the shares outstanding 50,000 ■ Total free float was 45% as of February 2018, including shares owned by HSBC and Dorval, as well as treasury shares and shares held by employees and management ■ Current market cap of EUR 260.7 million¹ Source: Company filings, Factset Note: 1) As of close at 18 March 2019 0 35 - 30 25 20 15 10 5 0 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 ferratum 49 49#50Leadership Team & Board of Directors Leadership Team Jorma Jokela CEO Lea Liigus Head of Legal and Compliance Ari Tiukkanen COO Clemens Krause CFO and CRO Saku Timonen CCO Board of Directors Pieter van Groos Chairman Pieter van Groos has been a member of the Board of Directors since 2015. Pieter has a strong international business leadership track record in industry, management consulting and financial services with Exxon-Mobil (1986-1994), McKinsey & Company (1994-1998), General Electric (1998- 2008), private equity and ventures Erik Ferm Board Member Erik was a manager at PwC (1991-1993), a partner at Maizels, Westerberg & Co in London (1993- 2000), an investment director at UBS Capital in London, a partner at Palamon Capital Partners in London until 2012 and since 2012 has been working as a director and a board member of GP Chambers. He joined the board of the Group in 2012 Kristjan Kajakas Business Unit Director Revolving Loans 16 Juhani Vanhala Board Member Juhani Vanhala has been a member of the Board of Directors since 2005. His management experience includes serving as CEO of VIA Group Oy, as CEO of Respace Oy between (2003-2006) and as Chief Development Officer at Empower Group Oy (2006-2012). Currently, he works at Empower Oy as Business line director for centralized and professional services Adam Tönning Head of FP&A Scott Donnelly Business Unit Director SME Lending Marius Solescu Head of HR Emmi Kyykkä Head of Group Communications and IR Antti Kumpulainen Business Unit Director Instalment Loans Sami Kalliola Head of Strategic Partnerships Christopher Wang Board Member Christopher Wang joined the BoD in May 2017. Christopher is a Managing Partner at J&W Partners Co. Ltd., a PE firm based in Seoul, South Korea which he co-founded in 2014. He has more than 15 years' experience as a transactional lawyer and investor operating in the Asian market, gained in roles at leading firms including Shearman & Sterling, DLA Piper and Jones Day ferratum 50#51Ferratum Group Structure ■ Part of Ferratum's operations are conducted under a banking license while the remainder of the operations do not require a banking license ■ Credit institution license (i.e. a banking license) was granted by the Malta Financial Services Authority in September 2012 ■ The banking license can be passported within the European Union " " Ferratum Bank provides consumer loans in a number of European countries as indicated in the table Remaining Ferratum Group subsidiaries provide consumer loans and financial services in other countries EU banking license operations Jorma Jokela 55.05% Ferratum Oyj (Guarantor) Subsidiaries Free Float 44.95%¹ Non-banking license operations Ferratum Bank Plc Western Europe Eastern Europe Outside EU SME Lending Sweden Spain Finland Romania New Zealand Finland Czech R Poland Bulgaria Denmark Lithuania Australia Sweden Poland Germany Norway United Kingdom Russia Netherlands United Kingdom Czech R France Netherlands Canada Denmark Australia Estonia Slovakia Nigeria Lithuania Latvia Croatia Brazil Mexico Note: 1) Including shares owned by Dorval and HSBC of 5.09% and 5.37%, respectively, and treasury shares of 0.67% ferratum 51#52Legal structure Overview of legal structure Detailed list of group companies Group share of Parent company Name Ferratum Finland Oy Baltic Skyways OÜ Country holding share of holding Finland 100% 100% Estonia 100% 0% Ferratum Oyj Guarantor Ferratum Sweden AB Ferratum Latvia SIA Ferratum Czech s.r.o. Global IT Services s.r.o. Pactum Poland Sp. z o.o. Ferratum Spain S.L. Ferratum Bulgaria EOOD Ferratum Denmark ApS Ferratum Capital Oy Global Guarantee OÜ Ferratum UK Ltd Sweden 100% 100% Latvia 100% 100% Czech Republic 100% 100% Slovakia 100% 100% Poland 100% 100% Spain 100% 100% Bulgaria 100% 100% Denrnark 100% 100% Finland 100% 100% Estonia 100% 100% Great Britain 100% 100% Ferratum New Zealand Ltd New Zealand 100% 100% Ferratum Capital Poland S.A. (in liquidation) Poland 100% 100% Ferratum Australia Pty Ltd Australia 100% 100% Ferratum d.o.o. u likvidaciji Croatia 100% 100% Ferratum Capital Germany GmbH Issuer and Funding SPV Microfinance Company Ferratum Russia LLC Russia 100% 100% Ferratum (Malta) Holding Limited Other operating subsidiaries Numeratum d.o.o. Croatia 100% 100% Ferratum Bank p.l.c. Malta 100% 0% Ferratum (Malta) Holding Limited Malta 100% 100% Swespar AB Sweden 100% 100% Ferratum Romania I.F.N. S.A. Romania 99.93% 99.93% Ferratum Bank p.l.c Rus-Kredit O00 Ferratum Capital Germany GmbH Ferratum International Services Oy Germany 100% 100% Russia 100% 100% Finland 100% 100% Ferratum International Services Oy, Helsinki, Zug Branch Head Office Ferratum International Services Oy Ferratum Germany GmbH Ferratum Canada Inc Germany 100% 100% Canada 100% 100% Ferratum Georgia LLC Georgia 100% 100% Ferratum Mexico S. de R.L. de C.V. Mexico 100% 100% UAB "Ferratum Finance" Lithuania 100% 100% Ferratum Chile Ltda Chile 100% 99% Pactum Collections GmBH Germany 100% 100% Ferratum Peru S.A.C. Peru 100% 99% FERRATUM BRASIL SERVICOS DE CORRESPONDENTE BANCARIO LTDA Brazil 100% 99% Auxilium Limited Malta 100% 0% Inari Servicos Financeiros Ltda Brazil 100% 99% Bidellus Nigeria Limited Nigeria 100% 0% Ferratum Services Limited Malta 100% 0% Ferratum Vakuutus Oy Bidcllus Bangladesh Ltd Ferratum International Services Oy Norway Branch Ferratum International Services Oy, France Branch Ferratum International Services Oy, Spanish Branch Head Office Ferratum International Services Oy Head Office Ferratum International Services Oy Head Office Ferratum International Services Oy Finland 100% 100% Bangladesh 100% 0% ferratum 52#53Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 53#54IFRS 9 diligent review and modifications Ferratum Group applied IFRS 9 as of 1 January 2018. IFRS 9 requires the recognition of loans at fair value, therefore any expected losses must be accounted for at the disbursement date Based on the initial assessments undertaken in Q1 2018, the total adjustment (net of tax) of the adoption of IFRS 9 on the opening balance of Ferratum Group's equity at 1 January 2018 was approximately EUR 7.6 million, representing: ■ a reduction of approximately EUR 9.3 million related to higher credit loss provisions ▪ an increase of approximately EUR 1.7 million related to deferred tax impacts During annual closing the used IFRS 9 modelling went through a diligent review and was modified in two elements: ■The default definition for PlusLoans, Prime Loans and SME lending was changed from 90+ days past due to 60+ days past due ■The statistical modelling for the probability of default for Credit Limit, Plusloans Prime loans and SME lending has been improved These changes of the credit loss provision model have to be applied consistently for the whole financial year 2018. This requires a change of the total adjustment (net of tax) on the opening balance of Ferratum Group's equity at 1 January 2018 from initially EUR 7.6 to finally EUR 15.1 million, representing: ■ a reduction of approximately EUR 20.9 million related to higher credit loss provisions ▪ an increase of approximately EUR 5.8 million related to deferred tax impacts ferratum 54#55Credit portfolio before and after IFRS 9 model change 1 January 2018 IFRS 9 (1 January 2018 restated) IFRS 9 (31 December 2018) EUR '000 Gross AR Reserves Net AR % Gross AR Reserves Net AR % Gross AR Reserves Net AR % Not overdue 158,368 (4,695) 153,673 3.0% 158,368 (12,810) 145,558 8.1% 205,616 (13,898) 191,718 6.8 1-90 days due 72,398 (17,649) 54,749 24.4% 72,398 (20,720) 51,678 28.6% 92,961 (21,127) 71,835 22.7 91-180 days due 21,474 (12,768) 8,706 59.5% 21,474 (12,734) 8,740 59.3% 23,234 (13,252) 9,982 57.0 >181 days due 84,004 (52,988) 31,016 63.1% 84,004 (53,485) 30,519 63.7% 145,998 (98,996) 47,002 67.8 Total 336,243 (88,100) 248,143 26.2% 336,243 (99,749) 236,495 29.3% 467,811 (147,273) 320,538 31.5 ferratum 55#56Interim results after IFRS 9 model changes Based on the modifications during year end closing to the IFRS 9 based credit loss provisioning model, the subsequent credit loss calculations of the interim reports for 2018 had to be adjusted accordingly Consolidated Income Statement for the Period 1/1/2018-31/3/2018 1/1/2018-30/6/2018 1/1/2018-30/9/2018 Restated REVENUE Impairments on loans Restated Impairments on loans Reported Difference Operating profit Profit before income tax Income tax expense Profit for the period 61,442 Restated 124,232 Restated 190,194 -18,986 -42,162 -65,400 -18,866 -40,609 -63,996 -120 -1,553 -1,404 10,048 16,591 25,429 6,506 8,175 13,706 -976 -1,227 -2,055 5,530 6,948 11,650 Earnings per share, basic 0.26 0.32 0.54 Earnings per share, diluted 0.25 0.32 0.54 Consolidated Statement of Financial Position 31/3/2018 Restated 30/6/2018 Restated 30/9/2018 Restated Total non-current assets Total current assets Total assets EQUITY AND LIABILITIES Total equity Total equity and liabilities Equity ratio % ASSETS Deferred income tax assets Accounts receivable - loans to customers 8,187 10,123 10,029 41,441 46,641 48,701 254,597 269,989 294,237 398,472 448,486 460,776 439,913 495,127 509,476 95,417 93,374 98,369 439,913 495,127 509,476 21.7 18.9 19.3 Net debt to equity ratio 2.20 2.47 2.56 Note: All details available on www.ferratumgroup.com ferratum 56#57Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 55 57#58Mobile Bank: The bank in your hand 咱 Easy Multi-national Mobile Real-time Deposits for more favourable refinancing of loan business Advantages for Ferratum Open platform for new and third-party products (commission) Mobile features improve customer loyalty Multi account access improves Big Data scoring State-of-the-art Mobile Bank based on Mobile account opening Real-time loans Deposits ■ Transactions ■Currencies Third-party products in future ferratum 58#59Key Regulatory Requirements on Ferratum Bank As of December 2018 Depositor Compensation Scheme (DCS) ■ 15% of covered deposits through a pledge of eligible assets At the end of each calendar quarter, the Bank needs to pledge 15% of covered deposits through a pledge of eligible assets in favor of the depositor compensation scheme ■ Covered deposits include deposit accounts in all currencies up to a EUR 100,000 (or equivalent) for each customer. The excess of deposits held by a customer in aggregate of this threshold or in any other currency, do not need to be pledged Liquidity Coverage Ratio (LCR) Highly liquid assets equal to or greater than 30 Days Net-Outflow Capital Requirements ■Minimum CET1 ratio of 10% ■ MFSA license condition 1 requires the Bank to hold a minimum CET1 (i.e. Core Equity Tier 1 capital as defined in article 50 of the EU Capital Requirements Regulation 575/2013) ratio of 10% to cover the basic requirements (i.e. credit, operational and market risk) Leverage Ratio ■ Bank's leverage ratio must be greater than the minimum 3% Tier 1 leverage ratio Leverage ratio risk is the risk that the Bank is not able to absorb losses on its assets due to having a high level of assets financed by debt ■ The LCR ratio is calculated with the following ratio: Liquid Assets ≥ 1 Net Stable Funding Ratio (NSFR) Liquidity Outflows - Liquidity Inflows ■ The NSFR complements the LCR where it establishes a minimum acceptable amount of stable funding based on the Bank's liquidity characteristics and activities over a one year horizon ■ The NSFR ratio is calculated with the following ratio: Available Amount of Stable Funding Required Amount of Stable Funding ≥ 1 Maximum Allowed Deposits ■ MFSA license condition 3 requires that funding from professional investors and total capital levels must be equal to or in excess of 35% of covered deposits Source: Company filings ferratum 59#60Ferratum Bank Income Statement Comments ■ As the Group has rolled out its bank offering across core markets, the Group's interest income has increased steadily with EUR 110 million in revenues recorded for 2018 ■ Interest and similar income is impacted by loans and advances to customers which consist of loans granted to individuals and are principally unsecured ■ The loans and advances are effectively subject to a fixed interest rate as all the Bank's revenue streams are amortised over the expected term of consumer loans using the effective interest method Income Statement EUR '000 2018 2017 2016 2015 2014 Interest and similar income 110,176 90,654 62,822 42,788 18,349 Interest and similar expense -4,633 -3,994 -2,973 -1,442 -255 Net interest income 105,542 86,660 59,849 41,346 18,094 Fee and commission income 2,739 2,717 803 344 208 Fee and commission expense -7,487 -7,284 -6,143 -2,729 -702 Net fee and commission and expense -4,748 -4,567 -5,340 -2,385 -494 Net interest income and Operating profit (EUR thousands) Net trading gains Operating profit 100,795 82,093 54,509 38,961 17,600 105,542 100,795 Employee compensation and benefits -8,690 -8,555 -7,621 -4,535 -2,422 86,660 82,093 Other operating costs -40,780 -29,172 -20,225 -13,170 -6,134 59,849 54,509 41,346 38,961 Depreciation and amortisation -436 -339 -136 -34 -21 Net impairment losses -37,188 -33,277 -23,262 -13,835 -5,281 Profit before tax 13,701 10,750 3,266 7,387 3,743 2015 2016 2017 2018 Tax expense -1,096 -661 -240 -2,586 -1,310 Net interest income Operating profit Profit for the period total comprehensive income 12,605 10,088 3,025 4,802 2,433 Note: Preliminary financial results for Ferratum Bank 2018. ferratum 60 60#61Ferratum Bank Balance Sheet Comments ■Loans and advances to customers consist of loans granted to individuals and are principally unsecured ■ The gross book value of loans in Ferratum Bank increased from EUR 16,370 thousand (FY 2014) to EUR 142,610 thousand (FY 2018) ■ The Bank is funded in part by equity, customer deposits, loans from Group companies and bonds issued in Ferratum Bank (EUR 40 million outstanding) Balance Sheet EUR '000 2018 2017 2016 2015 2014 Assets Balances with Central Bank of Malta 74,465 76,746 21,288 Loans and advances to banks 19,080 35,235 38,228 3,705 3,043 Loans and advances to customers 142,610 122,539 89,134 43,203 16,370 Loans and advances to group companies 10,578 4,469 352 1,361 Investment securities 8,633 8,951 11,571 Property, plant and equipment 1,168 502 333 165 101 Intangible assets 518 513 576 360 Total equity and liabilities for Bank Plc (EUR thousands) Other assets Total assets Equity 29,226 12,293 7,357 2,536 328 286,278 261,248 168,839 49,969 21,203 Share capital 10,000 10,000 10,000 10,000 10,000 Capital contribution reserve 25,500 20,500 12,000 286,278 Other reserves 1,476 821 709 536 261,248 Retained earnings 14,236 10,028 2,852 4,363 30% Total equity 51,213 41,349 25,561 14,898 97 2,345 12,442 168,839 Liabilities 235,065 Borrowed funds 65 154 345 4,219 219,899 15% Amounts owwed to customers 180,976 171,206 98,485 3 18% 16% Debt securities in issue 39,797 39,550 38,201 20,143 143,277 49,969 Loans and advances from group companies 2,858 3,557 Other liabilities 9,682 8,174 6,196 7,132 3,230 35,071 41,349 51,213 14,898 2015 25,561 2016 Current tax liabilities 1,753 904 242 3,891 1,312 2017 2018 Total liabilities 235,065 219,899 Total equity and liabilities 286,278 261,248 143,277 168,839 35,071 8,761 49,969 21,203 Total equity Total liabilities Equity ratio Note: Preliminary financial results for Ferratum Bank 2018. ferratum 61#62Table of Contents Introduction Operations Product portfolio Asset Quality, Funding, Liquidity & Capital Base Financials Market Overview Appendix Owners, Board of Directors and Management Team IFRS 9 adoption Ferratum Bank Risk Factors ferratum 62 32#63Risk Factors The Issuer is a subsidiary of the Guarantor and its operations are focused on raising financing for the Group. As such and because the Bonds are guaranteed by the Guarantor, the risks described below for the Group are equally relevant for the Guarantor and the Issuer. Potential investors should consider carefully the information contained in this section and make an independent evaluation before making an investment in the Bonds. RISKS RELATED TO THE GROUP'S OPERATIONS AND INDUSTRY An economic slowdown could adversely affect the demand for the Group's consumer loans, increase its credit losses and decrease its growth. Because the Group's business is dependent on consumer spending trends in the countries it operates in, any period of economic slowdown or recession in these countries could make it more difficult for the Group to retain or expand its customer base. For example, high levels of unemployment in the markets in which the Group operates will likely reduce the number of customers who qualify for the Group consumer loan products, which in turn may reduce its revenues. Similarly, reduced consumer confidence and spending may decrease the demand for its products. In addition, during periods of economic slowdown or recession, the Group could experience an increase in defaults, credit extension requests as well as a higher frequency and severity of credit losses even if the Group adjusts its credit scoring models to adjust to such new economic conditions. As a result, adverse changes in economic conditions in countries in which the Group's customers are located could materially adversely affect the business prospects, results of operations and financial condition of the Group. The Group may not be able to successfully evaluate the creditworthiness of its customers, may not price its consumer loan products correctly and may not be able to adequately diversify its consumer loan portfolio. The Group is exposed to the creditworthiness of its customers. The Group's customers generally have a higher frequency of delinquencies, higher risk of non-payment and, ultimately higher credit losses than consumers who are served by more traditional providers of consumer credit. The Group's customer base includes consumers who do not qualify for general purpose credit cards and consumers who are expanding their existing credits. The Group prices its consumer loan products taking into account the estimated risk level of its customers. If its estimates are incorrect, customer default rates could be higher, which would result in an increase in the Group's operating expenses relating to loan impairments, and in turn the Group could experience reduced levels of net income. The Group operates according to its established credit risk policies, uses computer-aided loan approval algorithms and follows a set of self- imposed ethical and responsible lending principles which were put in place by the Group and are regularly reviewed. The Group performs due diligence of its customers based on information provided by individual customers, reviews provided by external consumer credit scoring agencies and various other available information on the consumer. In addition, the Group uses its own software-based scoring procedure to rate the creditworthiness of new and existing customers. The software-based scoring procedure combines the Group's historical data from all markets it operates in with current information regarding the specific market and the customer. The Group's credit policies and software-based scoring procedure are refined and updated on an on-going basis. There is a risk that the aforementioned actions may prove insufficient. This may be caused by an internal failure of the Group's risk management procedures or an external change of conditions beyond the Group's control. Credit loss risks may further increase if the Group's consumer loan portfolio is not adequately diversified (country and social status diversification). In such a situation, a deterioration of economic conditions or an economic slowdown may additionally exacerbate the credit risk associated with insufficient diversification. An increase in the ratio of impairments on losses to revenues could significantly adversely affect the Group's financial, economic and liquidity condition. If the Group's risk provisions in relation to credit losses are not sufficient, the Group's results of operations and financial condition may be adversely affected. The Group needs to maintain risk provisions for anticipated credit losses. Since the provisions necessary to cover credit losses can only be estimated, there is a risk that actual credit losses are materially greater than the provisions accounted for to cover such losses. This could have a material adverse effect on the Group's business prospects, financial condition, or results of operations. Dependency on other companies within the Group. All of the Group's assets and revenues relate to companies within the Group other than the Issuer. The Issuer is thus dependent upon receipt of sufficient income and cash flow related to the operations of the other Group companies. Consequently, the Issuer is dependent on such companies' availability of cash and their legal ability to make necessary transfers which may from time to time be restricted by corporate restrictions and law. Should the Issuer not receive sufficient income from other Group companies, the investor's ability to receive payment under the Terms and Conditions may be adversely affected. If the Group incurs a large amount of fraud-related losses, the Group's results of operations and financial condition may be adversely affected. The Group is exposed to the fraud risk associated with information provided by its (potential) customers. The most common fraud risk is identity theft. There is a risk that the Group could suffer losses due to the criminal behaviour of its customers. This could have a material adverse effect on the Group's business prospects, financial condition or results of operations. If the Group does not generate a sufficient amount of cash to satisfy its liquidity needs, it may not be able to grow its business as a result of cash shortages. The Group's growth depends on cash flow efficiency and cash collection. Considering the Group's business model and the contemplated expansion in new markets, the Group is exposed to liquidity risk. There is a risk that the Group will not be able to satisfy its liquidity needs in the future. Lack of liquidity may occur in numerous scenarios. The Group, for instance, may experience a lack of liquidity due to an unexpected increase in rates of delinquencies or defaults on provided consumer loans. If the Group is unable to meet such cash requirements, its growth in new markets may be adversely affected. As a result, decreasing cash inflows from existing operations and/or increasing cash outflows associated with new operations may result in a material adverse effect on the Group's business prospects, financial condition or results of operations. If the Group does not have access to financing under affordable terms, it may not be able to expand its business and refinance its existing or future indebtedness. In order to support its growth and geographical expansion, the Group depends on external funds from credit and capital markets. If such external funds are not available under affordable terms, the Group may be required to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding necessary to cover the Group's business needs becomes available under affordable terms. Such measures could include deferring capital expenditures, including acquisitions, and reducing or eliminating use of cash for financing of further growth of the Group's business. Therefore, a limited availability of funds on the market combined with rising lending costs, especially when larger refinancing is required, may adversely affect the Group's growth in existing and new markets. If the Group could not refinance itself for a prolonged period of time or if the Group, due to adverse business developments, were to breach financial covenants in its financing instruments, the Group may be unable to service its debt with the liquidity provided from operating cash flows. This could have a material adverse effect on the Group's business, financial condition, or results of operations. ferratum 63#64Risk Factors (cont'd) The Group is subject to floating rate interest rate risks. The Group is subject to cash flow interest rate risk which is the risk that the future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Fair value interest rate risk entails the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. For instance, the Group's main interest rate risk arises from long-term borrowings that are issued with floating rate interest, amongst others, a EUR 25 million bond issued by the Group's Maltese banking subsidiary in 2016, with an additional EUR 15 million issued in connection with a tap issue in 2017, at a floating interest of EURIBOR plus a margin of 6.25% and a EUR 100 million bond issued by the Issuer in 2018 at a floating interest of 3 month EURIBOR plus a margin of 5.5%. These borrowings expose the Group to a cash flow interest rate risk. Should the risks relating to cash flow interest rate risk materialise in the future, this could have a material adverse effect on the Group's business, financial condition, or results of operations. The Group's business and results of operations may be adversely affected if the Group is unable to manage its growth effectively. The Group's expansion strategy contemplates the fast growth in mobile consumer loan volumes in current markets and the establishment of operations in new markets such as Brazil and Nigeria in 2017, Norway, France, Mexico and Canada in which the Group entered in 2015 or Germany and Romania which the Group entered in 2014. The Group's continued growth in this manner is dependent upon a number of factors, including the ability to develop efficient internal monitoring and control systems, the ability to implement high-quality business and management processes and standards, the ability to develop and implement "best practices" in response to day-to-day business challenges, the ability to secure adequate financing to successfully establish operations in new markets, the ability to turn new operations profitable within the expected time after the market entry, the ability to correctly assess legal requirements in targeted markets and monitor on-going changes in existing markets, the ability to obtain any government permits and licences that may be required, the ability to develop adequate and secured IT-platforms, the ability to successfully integrate any operations which may be acquired in the future, the ability to identify and overcome cultural and linguistic differences which may impact market practices within a given geographic region, and other factors, some of which are beyond the Group's control. Therefore, there is a risk that the Group will not be able to effectively manage the expansion of its operations or that the Group's current personnel, systems, procedures, and controls will be adequate to support the Group's operations. Any failure of management to effectively manage the Group's growth and development could have a material adverse effect on the Group's business, financial condition, or results of operations. In some countries, certain consumer loan products of the Group may not be offered in the same manner as in other countries due to more restrictive bank and consumer regulation. For instance, there are countries in which consumers cannot instantly access the Group's mobile consumer loan products. Under these circumstances, the business success of the Group depends on its ability to offer consumers alternative and equally attractive products. Failure to offer such alternative products may result in lower revenues of the Group in the respective markets. Since the establishment, the Group has expanded its product portfolio, which now consists of Microloans, instalment loans (so called Plus Loans), a Credit line product, Prime Loan as well as small business loans (Ferratum Business) and invested in further development of scoring capabilities by founding a dedicated company (Ferratum International Services Oy) and acquiring software that enables the analysis of a broad set of customer data. Product variations provide the Group with a diversified product portfolio. Nonetheless, the launch of new products - even when based on the same processes, systems, and scoring as the existing products - involves additional investments and carries the risk of product failure or implementation delays. Intensified investment costs and product introduction failure or delays may have a material adverse effect on the Group's business, financial condition, or results of operations. In addition, in 2015 the Group started its drive to become a mobile bank. In this regard, the Group has already and is further making significant investments into its internal operational structure and product offerings, including a mobile banking platform, its deposit taking operations, as well as investments, enhancements and modifications to its anti-money laundering risk, foreign exchange risk, liquidity risk, operational risk and fraud risk systems and processes. Should the Group be unsuccessful to establish itself as a mobile bank or if this strategy is delayed or more costly than expected, this could jeopardize return on investments, reduce profitability, lead to lost investments and thus could have a material adverse effect on the Group's business, financial condition, or results of operations. Organic growth, product variations, and geographical expansion are core components of the Group's growth strategy. However, growth through acquisitions (through the acquisition of a competing business or a loan portfolio or customer database) may also comprise part of the Group's strategy. Such acquisitions are accompanied by respective transactional risks. Any future acquisition may require significant financial resources (including cash). If the Group experiences any difficulties in integrating acquired operations into its business, the Group may incur higher than expected costs and may not realize all the benefits of such acquisitions. This could lead to adverse accounting and financial consequences, such as the need to write down acquired assets, which will have a material adverse effect on the Group's business prospects, financial condition or results of operations. Any disruption in the Group's information systems or external telecommunication infrastructure worldwide could adversely affect the Group's operations. IT systems are an essential component of the Group's business due to the diverse use of automated processes and controls. The Group improves its current systems continuously and has developed new systems, and introduced comprehensive maintenance schemes for its existing software. The Group utilizes a proprietary in-house loan handling system, which provides control and automation of day-to-day business. However, due to the open nature of the internet and the increasing sophistication of online criminality, all web-based services are inherently subject to risks such as online theft through fraudulent transactions and inappropriate use of access codes, user IDs, usernames, PINS, and passwords. In addition, despite the comprehensive maintenance efforts and careful development of the IT systems, they might fail and significantly impact the Group's operations. Damage to the Group's IT systems and software or failure to protect its data against a cyber- attack will have a material adverse effect on the Group's business, financial condition, or results of operations. The Group relies on telecommunications, the internet, as well as mobile and online banking services worldwide in order to conduct its operations and offer its services to customers. To access the Group's online consumer loan portals, the Group's customers need to have an internet access or a mobile data connection. Disruption of such or similar telecommunications and internet services in the respective countries of operation due to equipment or infrastructure failures, strikes, piracy, terrorism, weather-related problems, or other events, could temporarily impair the Group's ability to supply its product portfolio to its customers, which in turn could have a material adverse effect on the Group's business, financial condition, or results of operations. If the Group fails to geographically diversify and expand its operations and customer base, its business may be harmed. Several countries that the Group operates in such as Latvia, Estonia, Norway, Spain, the Netherlands, the United Kingdom, Australia, Poland, the Czech Republic, Denmark, Finland and Sweden generate a significant share of the Group's revenues. As a result, the Group is exposed to country-specific risks with respect to such national markets. In such markets, a dissatisfaction with the Group's products, a decrease in customer demand, the failure of the Group to successfully market new and existing products, or the failure to further expand its customer base and retain its existing customer base in these mature markets will have a material adverse effect on the Group's business prospects, financial condition or results of operations. If the Group will not be able to continue providing Group wide services through specific service companies, the Group's business may be harmed. Within the Group, there are several entities providing services to the operating companies. Should the Group not be able to continue the business operations of these service companies in the future, there is a risk for a material adverse effect on the Group's business, financial condition or results of operations. ferratum 64#65Risk Factors (cont'd) Negative public perception and press coverage of short-term unsecured consumer loans could negatively affect the Group's revenues and results of operations. Consumer protection bodies, consumer advocacy groups, certain media reports, and a number of regulators and elected officials in national markets in which the Group conducts business have from time to time advocated government action to prohibit or severely restrict certain types of short-term consumer lending. These efforts have often focused on lenders that target customers who have short term liquidity needs while having low levels of personal savings and in many cases low incomes and that charge consumers imputed interest rates and fees that, on an annualised basis, are higher than those charged by credit cards issuers or banks to more creditworthy consumers. Due to its engagement in the market for small consumer loans, the Group is exposed to the risk of unfavourable media coverage or measures taken by consumer protection bodies. As a result, the Group's operations and products may become subject of an advanced public scrutiny and tightening regulatory and transparency requirements. In addition, the Group may experience a decrease in demand for its products if consumers accept the characterization of such products as unreasonably expensive or abusive toward customers. Furthermore, media coverage and public statements that allege some form of corporate wrongdoing may make it more difficult for the Group to attract and retain qualified employees and management, as well as divert management attention and increase hiring expenses. A negative perception of the behaviour of individual employees, the Group itself or the entire industry may severely damage the Group's reputation and thus will have a material adverse effect on the Group's business prospects, financial condition or results of operations. Competition in the short-term lending industry could cause the Group to lose its market share and revenues. The Group faces competition in all the countries in which it operates. In some countries, such as the UK, there are particularly many competitors. There is a wide range of companies targeting the market for small consumer loans, including various smaller locally operating consumer loan companies as well as larger companies operating in several markets and traditional consumer banks. While the Group's key consumer loan segment relates to loans of EUR 5,000 and below with the average loan amounts being between EUR 200 and EUR 1300 per loan at the moment, most of the Group's competitors do not restrict the size of loans available through their companies and thus the Group is competing with a variety of local and international companies. In addition, the Group also competes with traditional banks with small business loans providing working capital loans. The highest risk of competition is experienced particularly in mature markets with high saturation, such as Western and Northern Europe. In the past, intensive competition has pushed prices downward in some markets, which, if competition further intensifies, could erode profit margins and the Group's net income. The Group believes that the consumer loan market may become even more competitive as the industry consolidates. Some of the Group's competitors may have larger and more established customer base and substantially greater financial, marketing and other resources than the Group has. As a result, the Group could lose market share and its revenues could decline, thereby affecting the Group's ability to generate sufficient cash flow to fund expansion of its operations and to service its indebtedness. This could have a material adverse effect on the Group's business prospects, financial condition or results of operations. A reduction in demand for the Group's products, and failure by the Group to develop innovative and attractive products, could adversely affect the Group's business and results of operations. The demand for a particular product the Group offers may be reduced due to a variety of factors, such as regulatory restrictions that decrease customer access to particular products, the availability of competing products, changes in customers' preferences or financial conditions. Furthermore, any changes in economic factors that adversely affect consumer purchase behaviour and employment could reduce the demand for the volume or type of loan products the Group provides and have an adverse effect on the Group's revenues and result of operations. Should the Group fail to adapt to significant changes in consumers' demand for, or access to, the microloan products, the Group's revenues could decrease significantly and operations could be harmed. Each modification, new products and alternative method of conducting business is subject to risk and uncertainty and requires significant investment in time and capital, including additional marketing expenses, legal costs and other incremental start-up costs. Even if the Group does make changes to existing products or introduce new products to meet customer demand, customers may resist or may reject such products. A significant part of the Group's revenues stems from new customers as well as from new products introduced in recent years to complement the Group's core Plus Loans and Credit Line products, such as Prime Loans and SME Loans. Additionally, the Group's strategy is to continue to evolve its product offerings to other bank products and to further establish itself as a mobile bank. If the Group is not able to further diversify and expand its product portfolio or if it fails to establish itself as a mobile bank, expand its customer base or reach enough deposits volume from customers and operate its planned common mobile bank application, this could have a material adverse effect on the Group's business, financial condition, or results of operations. The Group's future growth may depend on its ability to foresee the direction of the commercial and technological development of production processes and technologies in all of its key markets. Future growth and the Group's ability to reach its innovation targets will also depend upon the Group's ability to successfully develop new and improved consumer loan products and services, using its existing or new technological and servicing capabilities, and to successfully market the products in changing economic environments. There is a risk that the Group may not be successful in continuing to meet its customers' needs through innovation or in developing new products and/or technologies, or that, if developed, any such new products will not be accepted by the Group's customers. The Group may not be able to recover investments that it has made in order to develop these new products or processes, and may not have sufficient resources to keep pace with technological developments. The failure of the Group to keep pace with the evolving technological innovations in its markets and adequately predict customer preferences could have a material adverse effect on the Group's business, product portfolio, financial condition, or results of operations. The Group's operations are subject to exchange rate risk. The Group operates internationally and is therefore subject to unexpected changes in foreign currency exchange rates among various currencies. Foreign exchange risk arises in connection with current and future commercial transactions, recognized assets and liabilities, and net investments in foreign operations. Adverse foreign exchange fluctuations against the Euro (the Group's reporting currency), especially in the Swedish, Polish, British, Australian, Danish and Czech currencies could have a material adverse effect on the Group's business, financial condition, or results of operations. The Group is subject to accounting and management risk. Preparation of the Group's financial statements requires the Group's management to make estimates, assumptions and forecasts regarding the future. These estimates, assumptions and forecasts may be inaccurate and are inherently subject to uncertainties. Future developments may deviate significantly from the assumptions made if changes occur in the business environment and/or business operations. Furthermore, the Group's management is required to use its judgement in the application of the accounting principles in the preparation of the financial statements. Group companies and subsidiaries vary by their size and they are located in different parts of the world. The nature of the Group's global operations involves arrangements that often require the judgement of the Group's management in the application of accounting policies. Inadvertent errors in accounting and/or management decisions could have a material adverse effect on the Group's business, financial condition, or results of operations. Due to the size of the Group and its global presence in 25 countries, IFRS accounting may put significant further strain on the Group's internal resources in order to ensure compliance with the accounting principles, especially due to the Group's further international expansion in order to ensure compliant accounting for all of the entities within the Group. There is a risk that changes in the IFRS standards and policies may lead to significant resources needing to be allocated to ensure such compliance, which will have a negative effect on the Group's business, prospects for growth, financial condition and results of operations. ferratum 65#66Risk Factors (cont'd) Certain tax positions taken by the Group require the judgment of management and could turn to be inefficient or challenged by tax authorities. The Group's main tax risks are related to changes to or possible erroneous interpretations of tax legislation. Such changes or erroneous interpretations could lead to tax increases or other financial losses. Realization of such risks might have a material adverse effect on the Group's business, financial condition, or results of operations. It is possible that the Group has made interpretations of the tax provisions that differ from those of the tax authorities in the various countries in which the Group operates, and that as a result, the tax authorities will impose taxes, tax rate increases, administrative penalties, or other consequences on the Group's companies. This could have a material adverse effect on the Group's business, financial condition, or results of operations. If the Group loses its current CEO or key management or is unable to attract and retain the talent required for its business, the Group's operating results may suffer. The Group's success depends on its employees, which as of 31 December 2018 totaled 857 persons (full-time equivalent). Familiarity with internal processes and operational expertise of the Group's employees are critical factors in the efficiency of the Group's business operations. There is a risk that the Group will not be able to retain its key employees, which will have a significant impact on the Group's business operations. The Group is especially dependent on the expert knowledge of its CEO and majority shareholder Jorma Jokela as well as key management members in IT, legal, operational, financial as well as risk and analysis positions. If any of the key managers or other critical employees were to leave the Group or join a competitor, the Group may be unable to attract and retain suitable replacements. As a result, the Group may be unable to pursue its business operations as planned and this will have a material adverse effect on the Group's business, financial condition, or result of operations. Laws and regulations may restrict the Group's possibility to conduct its business and its profitability. The Group operates in a business that is heavily regulated. Present and potential future applicable laws and regulations may restrict the way the Group may conduct its business and may reduce its profitability. Legal requirements in respect of, for instance, interest rate caps may limit the Group's pricing of its products which would have a negative impact on the Group's earnings and result of operations. EU regulations in respect of e.g. capital requirements may also restrict the Group's possibility to conduct its business should the Group not have sufficient access to equity capital in order to fulfill applicable laws. This will have a negative impact on the Group's business, financial condition and result of operations. In addition to the aforementioned, the extensive laws and regulations in the business the Group operates in require the Group to spend both financial and human resources in order to ensure compliance with all applicable laws. There is a risk that an increase in regulations may necessitate the Group to spend even more financial and human resources in order to ensure legal compliance and to continue its business, which will have a material adverse effect on its business and financial condition. The Group may incur property, casualty or other losses not covered by insurance. There is a risk that the Group could sustain damages or incur liability claims that are not covered by the Group's insurance coverage in whole or in part. Further, there is a risk that insurance policies will not continue to be available, or that they will not be available at economically feasible premiums. The actual losses suffered by the Group may exceed the Group's insurance coverage and would be subject to limitations and excesses, which could be material. The realization of one or more damaging event for which the Group has no or insufficient insurance coverage will have a material adverse effect on the Group's business, financial condition, or results of operations. Moreover, any claims the Group makes under its insurance policies or the occurrence of an event or events resulting in a significant number of claims being made may also affect the availability of insurances and increase the premiums the Group pays for its insurance coverage. Hence, if the Group is unable to maintain its insurance cover on terms acceptable to it or if future business requirements exceed or fall outside the Group's insurance coverage or if the Group's provisions for uninsured costs are insufficient to cover the final costs, there is a risk that it will adversely impact the Group's operations, earnings and financial position. REGULATORY AND LEGAL RISKS The Group is subject to various consumer protection laws, other local legal and regulatory requirements and European law, changes of which or interpretations of which by authorities could significantly impact the Group's business. Changes to local legislation require the Group's respective local subsidiaries to adapt operations to ensure compliance with such changes. Failure to timely implement procedures that comply with new rules will have a material adverse effect on the Group's business, financial condition, or results of operations. There is a risk that local courts, regulatory agencies and financial supervisory authorities, issue new regulations or interpretations or find the Group's services to be in violation of local or EU-wide legal requirements such as license requirements, maximum interest rate provisions, transparency requirements or other regulatory requirements. For instance, there is a risk that the Finnish financial supervisory authority in the future would be of the view that, or issue an interpretation to the effect that, the Group's operations would be considered to require an authorisation or licence in Finland, since the parent company of the Group is Finnish, which the Group does not currently hold. In such case, the Guarantor or another entity within the Group would need either to apply for such authorisation or licence or to restructure the business in such manner that it is in compliance with the new requirements. Adverse judgments based on such findings or new regulations or interpretations could result in legal claims, administrative sanctions and reputational damage against the Group, need for restructuring or new licensing of the Group or alterations to the business carried out by the Group. Further, existing loan agreements might be held null and void by local courts. As a consequence, the Group may be restricted in successfully offering its services in certain jurisdictions or may be forced to terminate its business in certain jurisdictions. This could have material adverse impacts on the financial and market position of the Group. In the past, the Group has had to allocate resources in order to adapt its business model and product offerings in several countries as a result of regulatory changes. There is a risk that future regulatory changes may be too burdensome to comply with or may result in its business model in a particular jurisdiction becoming unprofitable. Such developments could have a material adverse impact on the financial and market position of the Group. The Group may fail to successfully manage the diverse sets of regulatory requirements the Group currently is subject to and may face regulatory problems entering into new markets. Business operations in a wide set of different jurisdictions with diverse statutory requirements necessitates careful management of the legal and regulatory challenges of many fields, including but not limited to: (i) licence requirements, (ii) maximum interest rate regulations, (iii) distance contracts regulations, and (iv) consumer protection legislation. These diverse legal frameworks implicate various legal and regulatory risks, including but not limited to the risks of market entry in new jurisdictions. The legal requirements for launching the Group's business in new jurisdictions vary significantly with some jurisdictions having no registration/licence requirements, while some jurisdictions requiring licences, e.g., a banking licence. Entering new jurisdictions implicates challenging legal requirements on a local level. Failure to comply with local legal requirements will have a material adverse effect on the Group's business, reputational standing, financial condition, or results of operations. In addition, the diversification of the group also increases its legal costs and continued compliance costs with local laws and regulations. ferratum 66#67Risk Factors (cont'd) The Group's business may be challenged by consumers, consumer protection organizations, courts, or regulatory agencies in connection with compliance with the EU Consumer Credit Directive and the national laws implementing the Directive as well as other mandatory consumer protection legislation. The EU Consumer Credit Directive (2008/48/EC) was adopted in April 2008 and entered into force in May 2008. The Member States were obliged to harmonize their legislation by May 12, 2010. Most EU Member States have implemented the directive. To serve the purposes of consumer protection and credit transparency, the EU Consumer Credit Directive mandates disclosure of a standardized annual percentage rate (APR) figure for all consumer credit products. Due to the nature of the Group's business model, whereby in most countries where the Group operates, small loan amounts are offered for very short periods of time, the extrapolated APRS may appear to be far higher than standard market APRS offered by other consumer credit companies and may therefore create an incorrect impression of the actual business relationship between the Group and its customers. The disclosure of high APRS may thus mislead consumers, consumer protection organizations, courts, or regulatory agencies in the belief that the Group is in violation of EU or local consumer protection and consumer credit regulations, specifically regarding interest rate caps. It is thus possible that legal or regulatory challenges may be brought against the Group regarding noncompliance with existing, amended, or new consumer protection or consumer credit laws. Adverse judgments based on such findings could result in legal claims and reputational damage against the Group. In addition, regulatory authorities have in recent times increased their inquiries as to compliance with European and local consumer protection laws, which, if this intensifies, could further increase the burden on the Group's compliance, legal and business departments managing communication with authorities. There is a risk that new or amended statutory requirements, for instance regarding the EU Consumer Credit Directive and the national laws implementing the Directive as well as other mandatory consumer protection laws and regulations, would require the Group to further adapt its practices and procedures. Such statutory changes and/or additions may negatively impact the Group's financial position and may require changes to the Group's business model. It is additionally possible that consumers, consumer protection organizations, courts, regulatory agencies, financial or consumer ombudsman, challenge the Group's compliance with existing, amended, or new consumer protection laws or initiate related investigative or judicial proceedings. Adverse judgments based on such findings could result in legal claims and reputational damage against the Group. Risks in relation to the Group's reputation. There is a risk that consumers, consumer protection organizations, or journalists misunderstand the nature or scope of the Group's products, which may result in reviews, articles, or complaints regarding the Group, the Group's products, or the industry. Such legal claims and negative publicity will have a material adverse effect on the Group's business, reputational standing, financial condition, or results of operation. The Group may lose required licences to operate the Group's consumer loan business or face challenges to renew such licences. The local financial authorities of some jurisdictions additionally require licences to operate a consumer loan business. There is a risk that, where a licence is required, the Group will not be able to maintain its licences on commercially favourable terms or at all. Accordingly, there is a risk of delay in obtaining the required licences, which may lead to operational delays. The loss of a licence or such operational delays may in turn have a material adverse effect on the Group's business, financial condition, or results of operations. The Group may be subject to sanctions and other penalties from local authorities. The Group operates in a business that is heavily regulated. Given the extensive regulatory requirements in respect of the Group, there is a risk that the Group will be in breach of such regulatory requirements which may lead to various sanctions and other penalties being imposed. The Group has previously been subject to audits where the authorities have found the business not to be compliant with applicable laws, which resulted in sanctions being imposed. There is a risk that the Group may be in breach of applicable laws in the future. Should such risks materialise, it will have a material adverse effect on the Group's business, financial conditions and results of operations. European Central Bank's Single Supervisory Mechanism. The European Central Bank has implemented the Single Supervisory Mechanism. Ferratum Bank p.l.c., the entity holding the banking licence under which the Group operates, is currently categorised as a less significant institution. However, Ferratum Bank p.l.c. may in the future be deemed to be a significant institution and, hence, being subject to a higher degree of regulatory requirements. Furthermore, there is a risk that institutions categorised as less significant institutions in the future will be subject to a higher degree of oversight and compliance related provisions. If any of these risks materialise, it will have a material adverse effect on the Group's business, financial standing and results of operations. The Group's Maltese banking subsidiary may fail to comply with regulations it is subject to and such failures could materially impact its operations and strategy. The Group operates in several markets making use of Ferratum Bank p.l.c.'s EU credit institution licence issued in September 2012 by the Malta Financial Services Authority, namely Poland, Estonia, Latvia, Germany, Bulgaria, the Czech Republic, Norway, France, Sweden, Spain and Croatia. This EU banking licence is required or may be required to conduct business in a number of existing and potential future markets. Ferratum Bank p.l.c.'s banking licence also provides the Group with the benefits of increased levels of trustworthiness vis-à-vis its customers, access to pertinent databases to further enhance scoring models, and funding options linked to accepting deposits to support profit growth. However, under Maltese law, the credit institution licence may be revoked or restricted by the MFSA for a variety of reasons including, but not limited to, the Group's non-compliance with existing or new regulatory requirements. Such a restriction or revocation of the credit institution licence would require the Group to comply with the existing or new regulatory requirements of the MFSA or obtain a banking licence from the relevant regulatory authority of another EU Member State. The MFSA will have to be informed in case a new shareholder accumulates a shareholding of 5% or more; whilst a new shareholder attaining a shareholding level of 10% or more will have to be approved by the MFSA so that the Group's Maltese banking subsidiary remains in compliance with Maltese laws and regulations. These factors could impair the Group's swift entry into new European markets and/or result in operational delays that could have a material adverse effect on the Group's business, financial condition, or results of operations. The Group is subject to a diverse set of tax regimes in the jurisdictions it operates in and changes in such tax regimes could materially impact its business, financial condition, or results of operations. The Group operates in different countries with diverse sets of tax regimes and operates its banking subsidiary in Malta subject to Maltese tax law. Corporate income tax, value added tax or sales taxes and other taxes levied upon on the Group's business are subject to change and can be increased, changed or completely restructured at any time. While the Group monitors tax changes consistently and is from time to time subject to tax audits, the Group has not faced any significant tax challenges or tax disputes with tax authorities in the past three years. Changes to local tax regimes or challenges to the current tax structures of the Group's business could have a material adverse effect on the Group's business, financial condition, or results of operations. ferratum 67#68Risk Factors (cont'd) Failure to comply with data protection and privacy law could negatively affect the Group's reputation business and financial position. The Group registers, processes, stores and uses personal data in the course of its business, and it is of high importance that the Group takes such actions in accordance with applicable personal data legislation and requirements. The Group's operations are subject to a number of laws relating to data privacy, including Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (GDPR) and Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) (the latter as implemented in different jurisdictions in which it operates) as well as relevant data protection and privacy laws. The GDPR includes higher sanctions for breaches than previous data protection legislation and there is a risk that the fines could amount to the higher of EUR 20 million or four per cent. of the global turnover. The requirements of these laws may affect the Group's ability to collect and use personal data in a way that is of commercial use to the Group. Breach of data privacy legislation could result in the Group being subject to claims from its customers that it has infringed their privacy rights, and it could face administrative proceedings (including criminal proceedings) initiated against it by the data protection regulators. In addition, any inquiries made, or proceedings initiated by, the regulator could lead to negative publicity in addition to potential liability for the Group, which could materially adversely affect its reputation and business. Hence, if the Group is in breach of personal data legislation this could have a material adverse effect on the Group's business, earnings or financial position. There is a risk that future changes of data protection and privacy laws may lead to the Group not being able to continue its operations in the same course of action as currently. There is also a risk that changes in these regulations may increase costs to ensure compliance with such laws, having a material adverse effect on the Group's operations, earnings and financial position. Legal disputes and litigations could have a negative effect on the Group's business, financial position and results of operation. The Group is not currently involved in any material legal disputes or litigations. There is however a risk that the Group could become involved in legal disputes or subject to other litigation in the future. Disputes of different kinds can be time consuming, disrupt normal operations, involve large amounts and result in considerable costs and reputational risks, which would have a negative effect on the Group's business, financial position and results of operation. c) a bail-in is necessary in the public interest. Bail-in would apply to any liabilities of the Group not backed by assets or collateral. It would not apply to deposits protected by a deposit guarantee scheme, short-term inter-bank lending or claims of clearing houses and payment and settlement systems with a remaining maturity of seven days, client assets, or liabilities such as salaries, pensions, or taxes. After shares and other similar instruments, bail-in will first, if necessary, impose losses evenly on holders of subordinated debt and then evenly on senior debt-holders. Deposits from SMEs and natural persons, including those in excess of EUR 100,000, will be preferred to senior creditors. The tool applies as of 1 January 2015 to all outstanding and newly issued debt. Accordingly, in the event that Ferratum Bank meets the trigger conditions for entry into resolution, any portion of the Bonds, including both principal and accrued interest, that will not be backed by collateral could become subject to a write down or otherwise converted to equity as determined by the Resolution Authority. The write-down of liabilities and/or their conversion to equity will be beyond the Issuer's control. The write-down or conversion would follow the ordinary allocation of losses and ranking in insolvency. Equity has to absorb losses in full before any debt claim is subject to write-down or conversion. The determination by the Resolution Authority shall not constitute an event of default and bondholders will not have any further claims in respect of any amount so written off, converted to equity or otherwise applied to absorb losses. As a result, bondholders may lose all or part of their investment. The term 'Resolution Authority, as utilised in this section, refers to the public administrative authority appointed within the jurisdiction of Malta and empowered to apply the resolution tools and exercise the resolution powers described in the BRRD. The resolution authority in Malta is the Malta Financial Services Authority. Credit risks. Investors in the Bonds carry a credit risk relating to the Group. The investors' ability to receive payment under the Terms and Conditions is dependent on the Issuer's ability to meet its payment obligations, which in turn is largely dependent upon the performance of the Group's operations and its financial position. The Group's financial position is affected by several factors of which some will be mentioned on the proceeding pages. An increased credit risk may cause the market to charge the Bonds a higher risk premium, which would affect the Bonds' value negatively. Another aspect of the credit risk is that a deteriorating financial position of the Group may reduce the Group's possibility to receive debt financing at the time of the maturity of the Bonds. RISKS RELATING TO THE BONDS The EU Bank Recovery and Resolution Directive could have a negative effect on the bondholders' investment. The EU Bank Recovery and Resolution Directive (the "BRRD" or the "Directive"), which sets common rules across the EU for dealing with failing banks and large investment firms, came into force on 1 January 2015. The BRRD lays out a comprehensive set of measures that ensure that both banks and authorities make adequate preparation for crises, by empowering national authorities to intervene in troubled institutions at a sufficiently early stage to address developing problems, and to take rapid and effective action when bank failure cannot be avoided. The Directive has also established a bail-in system. In Malta, bail-in was immediately applicable to junior debt holders as from 1 January 2015 and applicable to senior debt holders from 1 January 2016. The purpose of the bail-in system is to stabilise a failing bank so that its essential services can continue, without the need for bail-out by public funds. The tool enables authorities to recapitalise a failing bank through the write-down of liabilities and/or their conversion to equity so that the bank can continue as a going concern, giving authorities time to reorganise the bank or wind down parts of its business in an orderly manner. In the process, directors and senior management may be removed or replaced if those persons are found unfit to perform their duties. The application of the bail-in system requires the prior evaluation as to whether certain conditions are met. In particular, the following pre-requisites would need to be satisfied: a) a determination by the competent authority or Resolution Authority that a bank is failing or is likely to fail; b) no reasonable prospect that any alternative private sector measures or supervisory action would prevent the failure of the bank within a reasonable timeframe; and Refinancing risk. The Group may eventually be required to refinance certain or all of its outstanding debt, including the Bonds. The Group's ability to successfully refinance its debt is dependent on the conditions of the capital markets and its financial condition at such time. The Group's access to financing sources may not be available on favourable terms, or at all. The Group's inability to refinance its debt obligations on favourable terms, or at all, could have a material adverse effect on the Group's business, financial condition and results of operations and on the bondholders' recovery under the Bonds. Liquidity risk. The Issuer intends to list the Bonds on the corporate bond list of Nasdaq Stockholm and initially in the Open Market and later on the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange (provided that the volume requirement is met). Even if the Bonds are admitted to trading on the aforementioned markets, active trading in the Bonds does not always occur and a liquid market for trading in the Bonds might not occur even if the Bonds are listed. This may result in the bondholders not being able to sell their Bonds when desired or at a price level which allows for a profit comparable to similar investments with an active and functioning secondary market. Lack of liquidity in the market will have a negative impact on the market value of the Bonds. Furthermore, the nominal value of the Bonds may not be indicative compared to the market price of the Bonds if the Bonds are admitted to trading. It should also be noted that during a given time period it may be difficult or impossible to sell the Bonds (at all or at reasonable terms) due to, for example, severe price fluctuations, close down of the relevant market or trade restrictions imposed on the market. ferratum 68#69Risk Factors (cont'd) Risk of early redemption and put option. Under the Terms and Conditions, and as described in the term sheet for the Bonds, the Issuer will reserve the possibility to redeem all outstanding Bonds before the final redemption date. If the Bonds are redeemed before the final redemption date, the holders of the Bonds have the right to receive an early redemption amount which exceeds the nominal amount in accordance with the Terms and Conditions. However, there is a risk that the market value of the Bonds is higher than the early redemption amount and that it may not be possible for bondholders to reinvest such proceeds at an effective interest rate as high as the interest rate on the Bonds and may only be able to do so at a significantly lower rate. The Bonds will be subject to prepayment at the option of each bondholder (put options) if an event or series of event occurs whereby Jorma Jokela ceases to own and control more than 50 per cent. of the share capital and votes in the Guarantor or, in case of a new share issue following the First Issue Date, Jorma Jokela ceases to own and control more than 35 per cent. of the share capital and votes in the Guarantor and one or more persons acting together acquire control over the Guarantor. The Bonds will also be subject to prepayment at the option of each bondholder if the shares of the Guarantor cease to be admitted to trading on the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange or a regulated market of another stock exchange. There is, however, a risk that the Issuer will not have sufficient funds at the time of such prepayment to make the required prepayment of the Bonds which could adversely affect the Issuer, e.g. by causing insolvency or an event of default under the Terms and Conditions, and thus adversely affect all bondholders and not only those that choose to exercise the option. Market price risk. The development of market prices of the Bonds depends on various factors, such as changes of market interest rate levels, the policies of central banks, overall economic developments, inflation rates or the lack of or excess demand for the Bond. The bondholders are therefore exposed to the risk of an unfavourable development of market prices of their Bonds which materialise if the bondholders sell the Bonds prior to the final maturity. If a Bondholder decides to hold the Bonds until final maturity, the Bonds will be redeemed at the principal amount of the Bonds. Creditworthiness of the Guarantor. If, e.g., because of the materialisation of any of the risks regarding the Guarantor, the likelihood that the Guarantor will be in a position to fully perform all obligations under the Bonds when they fall due decreases, the market value of the Bonds will suffer. In addition, even if the likelihood that the Guarantor will be in a position to fully perform all obligations under the Bonds when they fall due actually has not decreased, market participants could nevertheless have a different perception. In addition, the market participants' estimation of the creditworthiness of corporate debtors in general or debtors operating in the same business as the Group could adversely change. Further, a downgrade of the Guarantor's rating may - irrespective of the actual creditworthiness of the Guarantor - lead to a decrease of the exchange price of the Bonds. If any of these risks occurs, third parties would only be willing to purchase Bonds for a lower price than before the materialisation of said risk. Under these circumstances, the market value of the Bonds will decrease. Risks relating to the Bonds being unsecured. The Bonds constitute unsecured debt obligations of the Issuer. If the Issuer and/or the Guarantor is subject to any foreclosure, dissolution, winding-up, liquidation, recapitalisation, administrative or other bankruptcy or insolvency proceedings, all of the Issuer's and the Guarantor's secured obligations must first be satisfied, potentially leaving little or no remaining assets in the Issuer or the Guarantor for the bondholders. As a result, the bondholders may not recover any or the full value of their investment. The bondholders will only have an unsecured claim against the assets (if any) in the Issuer and the Guarantor for the amounts under or in respect of the Bonds, which means that the bondholders normally would receive payment (pro rata with other unsecured non-priority creditors) after any priority creditors have been paid in full. Each investor should be aware that by investing in the Bonds, they risk losing the entire, or part of, the investment in the event of the Issuer's or the Guarantor's liquidation, bankruptcy or group re-organisation. Currency risk. The Bonds are denominated in Euro. If such currency represents a foreign currency to a bondholder, such bondholder is particularly exposed to the risk of changes in currency exchange rates which may affect the yield of such Bonds in the currency of the bondholder. Changes in currency exchange rates result from various factors such as macro-economic factors, speculative transactions and interventions by central banks and governments. In addition, government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable currency exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal at all. Interest rate risk. The Bonds' value depends on several factors, one of the most significant over time being the level of market interest. Investments in the Bonds involve a risk that the market value of the Bonds may be adversely affected by changes in market interest rates. Resolutions of bondholders. Since the Bonds provide for meetings of bondholders or the taking of votes without a meeting, a bondholder is subject to the risk of being outvoted by a majority resolution of the bondholders. As such majority resolution is binding on all bondholders, certain rights of such bondholder against the Issuer under the Terms and Conditions may be amended or reduced or even cancelled. Bondholders' representative. Since the Bonds provide for the appointment of a bondholders' representative, it is possible that a bondholder may be deprived of its individual right to pursue and enforce its rights under the Terms and Conditions against the Issuer, such right passing to the bondholders' representative who is then exclusively responsible to claim and enforce the rights of all the bondholders. Consequently, individual bondholders do not have the right to take legal actions to declare any default by claiming any payment from or enforcing any security granted by the Issuer and may therefore lack effective remedies unless and until a requisite majority of the bondholders agree to take such action. However, there is a risk that an individual bondholder, in certain situations, could bring its own action against the Issuer (in breach of the Terms and Conditions) which could negatively impact an acceleration of the Bonds or other action against the Issuer. To enable the Agent to represent bondholders in court, the bondholders and/or their nominees may have to submit a written power of attorney for legal proceedings. The failure of all bondholders to submit such a power of attorney could negatively affect the legal proceedings. Under the Terms and Conditions, the Agent will in some cases have the right to make decisions and take measures that bind all bondholders. Consequently, the actions of the Agent in such matters could impact a bondholder's rights under the Terms and Conditions in a manner that would be undesirable for some of the bondholders. No restriction on the amount of debt which the Issuer may incur in the future. There is no restriction on the amount of debt which the Issuer may issue which ranks equal to the Bonds. Such issuance of further debt may reduce the amount recoverable by the Bondholders upon winding-up or insolvency of the Issuer or may increase the likelihood that the Issuer may or shall defer payments of interest under the Bonds. ferratum 69#70Risk Factors (cont'd) Benchmark Regulation. The process for determining EURIBOR and other interest-rate benchmarks is subject to a number of legislative acts and other regulations. Some of these acts and regulations have already been implemented whilst some are set to be implemented in the near future. The most extensive initiative in this respect is Regulation (EU) 2016/1011 of the European parliament and of the council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (the ("Benchmark Regulation"). The Benchmark Regulation came into force on the 1 January 2018. The Benchmark Regulation addresses the provision of benchmarks, the contribution of input data to benchmarks and the use of benchmarks within the European Union. The effect of the Benchmark Regulation cannot yet be fully determined due, among other things, to the limited time period that the regulation has been applicable. However, there is a risk that the Benchmark Regulation will affect how certain benchmarks are determined and how they develop in the future. This could, for example, lead to increased volatility regarding some benchmarks. Another risk is that increased administrative requirements, and resulting regulatory risk, may discourage stakeholders from participating in the production of benchmarks, or that some benchmarks cease to be provided. If this would happen in respect of a benchmark that is used for the Bonds, it would have negative effects for the bondholders. Liquidity Risk. In January 2018, the Markets in Financial Instruments Directive 2014/65/EU (MiFID II) and Markets in Financial Instruments Regulation 600/2014 (MiFIR) entered into force. Pursuant to the new rules, the reporting and transparency requirements have increased on the fixed income market. As a consequence, this may cause the financial institutions which are acting as intermediaries in the trade of financial instruments to be less willing to purchase financial instruments on their own books. Should this risk materialise, it could have a negative impact on the liquidity of the Bonds which could have a negative impact on the market value of the Bonds. ferratum 70 0#71ferratum ASSICURAZIONI GENERALI CETRIESTE E VENEZIA