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Kreditech to Break Even in Cash Flow in 2020

Vlad Poptamas

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Kreditech’s financial statement for the financial year 2018[1] shows that the company is on track to reach profitability in the near future. The performance of the Hamburg-based fintech has improved significantly as a result of a new strategy that was implemented in 2018. The net financial result improved by 76% compared to the 2017 – driven by a strong focus on achieving profitability, evolution of the product portfolio, investment in innovations and effective cost-management measures. A recent capital injection from both existing and new investors has provided the company with funds to continue its transformation and focus on growth.

Kreditech combines market-leading tech capabilities and data science, with sound insight into consumer borrowing needs and extensive experience in Point of Sale (POS) and e-commerce partnerships. The company lends through its consumer brands Monedo Now and Kredito24, as well as through partners in four markets: IndiaPolandRussia and Spain. In 2018, the company focused on pivoting its operations toward the near-prime lending market, with installment loans as a key product. A new management team was installed in early 2018 and, since that time, has focused its efforts on improving Kreditech’s operational efficiency, risk- and cost-management capabilities, and driving toward profitability. Throughout 2019, the company has successfully transitioned back to growth in its core installment loan product and has achieved its highest-ever levels of monthly installment loan issuance.

“Our results for 2018 clearly indicate that we have made excellent progress towards achieving our strategic objectives. We successfully expanded into the near-prime segment in most of our major markets, and we have continued – and will continue – in this strategic direction throughout the whole of 2019. Our growth is supported by investments in core infrastructure and the successful opening of exciting new possibilities, such as obtaining an NBFC license in India, which enables us to expand in this high-potential market,” says David Chan, company CEO.

The Kreditech CEO believes that changes implemented in 2018 have resulted in further growth of the Kreditech business in all key areas in 2019. “2019 has proven to be a period of further stabilization, and we are confidently looking towards a sustainable and profitable growth trajectory in all our strategic markets,” comments David Chan.

The Kreditech Profit and Loss (P&L) statement for 2018 indicates a significant improvement and change in the company’s performance. The fintech’s net losses fell by 76%, from EUR 58.4 million in 2017 to EUR 13.9 million for 2018. The result was driven by improved profitability of sales operations, combined with effective risk- and cost management. Although revenue fell by 21.4% (from EUR 71.4 million in 2017 to EUR 56.1 million in 2018), this was more than made up for by a reduction in impairments. The net result is an increase in gross margin (+32.3%) and a much-improved gross rate of return (38.7% in 2018, up from 23.0% in 2017).

In 2018, Kreditech issued EUR 107.3 million of credit across all of the markets in which it provides lending services. The company generated revenue from core products amounting to EUR 56.1 million. This represents a decline of approximately 21% compared to the previous financial year, which is a reflection of Kreditech’s shift in strategic product focus from high-yield and short-term microloans with higher risk, to long-term installment loans, demand for which is growing at a disproportionately higher rate. “Our focus on more long-term and lower-risk products enables us to profitably scale our business at a healthy pace, and creates a sustainable and reliable cash flow,” remarked Mariusz Dąbrowski, Kreditech CFO.

With the main focus being on achieving profitability, the 2018 issuing volume (nominal value of the total of newly issued consumer loans) declined by around 42%, from EUR 185.2 million in 2017 to EUR 107.3 million“We have consciously kept our issuing dynamics under strict control, to allow for a smooth transition to a new technical infrastructure,” says David Chan, CEO. With the aim of being a global platform of choice for tech-based lending, Kreditech has been investing in the infrastructure that underpins its services. This investment will enable Kreditech to benefit from enhanced scalability, resiliency, and the ability to add features and capabilities quickly and cost effectively. Kreditech’s new core system – a cloud-based banking platform called Mambu – was successfully deployed in Poland in Q1 2019 and in Spain in Q3 2019.

With Kreditech’s focus being on the improvement of its portfolio quality, the level of impairments has been significantly reduced. Net impairment expenses for credit losses were reduced by 13 percentage points (p.p.), from 69% of revenue (EUR 49 million) in 2017 to 56% of revenue (EUR 31.4 million) in 2018. “This change was driven by an increase in the proportion of much lower-risk installment loans. We are happy to report that impairments are dramatically lower, contributing to our improved results. This reduction in impairments demonstrates our ability to effectively manage this area of our operations,” says Mariusz Dąbrowski.

Kreditech reported a 55% reduction in operating expenses (down to EUR 32.3 million) in 2018, which enabled operating losses to be reduced by 81% (from EUR 53 million in 2017, to EUR 10.3 million in 2018). A focus on deeper commercial engagement resulted in streamlined processes, which enabled the company to benefit from lower customer acquisition costs while increasing conversion rates. For the whole of 2018, Kreditech’s customer acquisition costs (CAC) were just EUR 3.7 million, which amounts to just 7% of gross revenue (compared to CAC amounting to 30% of gross revenue in 2017).

Kreditech generated a positive cash flow from lending activities in 2018 (EUR 26 million compared to EUR 15.1 million in 2017) and the negative cash flow from operations was dramatically reduced (from EUR 89.2 million in 2017 to 13.8 million in 2018), thanks to decreased refinancing costs, better interest rates from new loan facilities and an overall reduction in spending. “We are proud to report that the positive cash trends have continued in 2019 and will result in a projected break even in 2020. This is a clear indication that our strategic decisions are making Kreditech a healthy, profitable and growing business,” says David Chan.

Kreditech’s mission is to be the global leader in technology-enabled consumer lending and the platform of choice in the near-prime market. Headquartered in Hamburg, Germany, Kreditech currently employs more than 300 people across seven countries. With well-established and growing operations in PolandSpain and Russia, Kreditech’s near-term focus will be on rapidly scaling its business in India. The company also has plans to further expand in other major consumer-lending markets in the coming years.

 

SOURCE Kreditech

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Hobo Cannabis Company Secures Majority Market Share in Vancouver with Launch of Fourth Location

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VANCOUVER, British Columbia, Feb. 18, 2020 (GLOBE NEWSWIRE) — Hobo Cannabis Company (“Hobo”) today announces the opening of its newest retail store, located in the heart of Vancouver’s shopping district on Robson Street (1173 Robson Street). This marks the company’s fifth location province-wide, and fourth location in Vancouver, granting Hobo majority market share in the city with the launch of this 2,100 square foot store.
“We’re proud to be further investing in the growth of the cannabis industry and the local community at home on the West Coast,” said Harrison Stoker, VP Brand at Donnelly Group. “As the new year kicks off, we’re so thankful for all that we’ve achieved this past year as we’ve grown Hobo here, in Vancouver, and look forward to bringing Hobo Cannabis Company to more communities across Canada throughout 2020.”The new location features a carefully curated lobby entrance and new design elements to support the rollout of Cannabis 2.0 products including vaporizers and edibles. Hobo Robson will also showcase the company’s first terpene bar: an interactive experience that presents cannabis’ common terpenes as everyday smells, distilled into aromatic essential oil blends by the experts at the group’s Barber & Co laboratory in downtown Vancouver. The bar, which was first previewed at Lift&Co Expo Vancouver in January, will feature terpenes including Myrcene (Herbal), Limonene (Citrus), Caryophyllene (Spice), Terpinolene (Herbaceous), Pinene (Pine), Linalool (Floral) and aims to help buyers explore and get to know their favourite cannabis strains in a new way.This news follows the company’s announcement of three upcoming Ontario locations, including the first legal cannabis retail store in Timmins, as well as a location in Ottawa’s historic ByWard Market, and another in the neighbourhood of Nepean. The announcement comes ahead of the company’s market entry into the prairie provinces, with three locations currently under construction in Alberta.About Hobo Cannabis CompanyHobo Cannabis Company, a Donnelly Group venture, is a Canadian collection of privately-owned retail cannabis stores with locations in B.C., Ontario, and Alberta. As a testament to Hobo’s commitment to the consumer experience and making the cannabis buying experience disarming, compassionate and human, Hobo will employ a contemporary aesthetic rooted in simple, functional design and feature a well-considered product range and frictionless technology.Hobo Cannabis Company’s five locations now include Robson (1173 Robson Street, Vancouver), Kitsilano (1952 West 4th Avenue, Vancouver), Airport (8425 Granville Street, Vancouver), Main (4296 Main Street, Vancouver), and Kelowna (2121 Springfield Road, Kelowna) offering consumers a selection of five cannabis intents: Move (THC dominant), Lift (THC leaning), Balance (equal parts THC to CBD), Calm (CBD dominant), and Rest (THC dominant). For more information, visit https://hobo.ca.Media Contact
Jen Hazell
Talk Shop Media
On behalf of Hobo Cannabis Company
604-738-2220
press@hobo.ca

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Agritek Holdings, Inc. Named Number One Short Term Cannabis Stock on Top 25 List by CANNAINVESTOR Magazine for Week of February 17th 2020

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LOS ANGELES, CA, Feb. 18, 2020 (GLOBE NEWSWIRE) — via NEWMEDIAWIRE — Agritek Holdings, Inc. (AGTKwww.AgritekHoldings.com, a fully integrated, active real estate investor and white label provide for popular hemp brands, today announced that the Company was named the number one from a list of 25 undervalued cannabis companies as the top short term investment by CANNAINVESTOR Magazine this week.

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Christina Lake Cannabis Conducts Management Changes

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VANCOUVER, British Columbia, Feb. 17, 2020 (GLOBE NEWSWIRE) — Christina Lake Cannabis Corp. (the “Company” or  “CLC” or “Christina Lake Cannabis”) announces today that Mr. Benjamin Asuncion has resigned as a director and Mr. Arie Prins has stepped down as President, Chief Executive Officer (“CEO”) and a director of the Company effective immediately. The board of directors has appointed Mr. Joel Dumaresq, Director and Chief Financial Officer as the Company’s interim-CEO to replace Mr. Prins.
Mr. Dumaresq has been active in Christina Lake Cannabis since the outset and will manage the Company through its planned public listing, pending Health Canada licensing, and planned cultivation and processing phases.Over the past 15 months, Mr. Prins oversaw the acquisition, buildout and construction of CLC’s 131-acre outdoor grow facility as well as the recent submission to Health Canada of the Company’s final evidence package in conjunction with its application for a Standard Cultivation License. Christina Lake Cannabis is also pleased to announce that Nicco Dehaan, a sizable investor in, and director of the Company since its founding, has agreed to assume the role of Chief Operating Officer of CLC.  Mr. Dehaan is highly experienced in the industry having held for over seven years a license for the growing of medical Cannabis.  Nicco will be responsible for overseeing all of CLC’s cultivation and processing operations along with expansion on the Company’s ‘131-acre owned-property’ and over ‘200 acre optioned-property’, once the necessary licenses have been secured.The Company further announces the immediate formation of an advisory committee to provide management with input and advice as the Company nears production.  Christina Lake Cannabis is pleased to welcome Mr. Gil Playford and Mr. Mervin Boychuk to the Advisory Committee. Mr. Asuncion will remain involved with Christina Lake Cannabis as an advisor to the Company, and has chosen to vacate his Board position in order to make room on the Board for individuals with direct operational experience.Gil Playford, presently one of Christina Lake Cannabis’ largest shareholders with over a 10% ownership, is a seasoned senior mining executive and founder of LionOre Mining International, with nickel and gold assets in Africa and Australia. In 2007, Mr. Playford spearheaded the sale of LionOre Mining to Norislk Nickel for C$6.8 billion in cash.  Mr. Playford started his professional career with Union Carbide Corp. for 25 years and various senior executive positions including Managing Director in Switzerland, Belgium and Germany.  Mr. Playford also was the Chairman and CEO of Union Carbide Canada and Chief Financial Officer of Union Carbide in New York.  He became Chairman and CEO of UCAR Carbon, a joint venture with Mitsubishi and took the partnership public as GrafTech International.  Mr. Playford is presently Chairman and CEO of Bearing Lithium Corp. (BRZ-TSXV), a mineral and exploration development company listed on the Toronto Venture Stock Exchange (TSXV). Gil holds an Engineering Degree from McGill University in Montreal and a Master’s in Business Administration from York University in Toronto.Mervin Boychuk is a serial entrepreneur having founded, built, and sold four private businesses over his 35-year career. Mr. Boychuk joined South Rock Ltd, a private road construction company, in 1978 and subsequently became President & CEO in 1980. Under his guidance, the company grew from 20 employees to over 350, with annual revenues in excess of C$180 million, before subsequently selling to Aecon Group Inc. in 2009. During his tenure at South Rock, Merv co-founded RecycleWest, a waste oil collection and supply company, which was later sold to Newalta in 1995. In 1996, Merv co-founded EnviroWest which serviced the BC, Alberta, and Saskatchewan vacuum truck sludge and waste oil collection markets. EnviroWest was sold to GFL Environmental in 2010, a large waste management company which employs over 8,850 people. Merv is a significant shareholder in Christina Lake Cannabis and continues to be active in the family-owned waste treatment business in Calgary and Edmonton. Commented Joel Dumaresq, “I would like to personally thank Arie for his leadership during the construction of what we believe is Canada’s premier outdoor grow facility.  As we await Health Canada approval of our cultivation application, and further as we prepare for our public listing, our operational capabilities have been greatly enhanced with the addition of Nicco, along with Gil and Merv, two highly-accomplished private entrepreneurs and operators.”About Christina Lake Cannabis Corp.Christina Lake Cannabis Corp is a late-stage applicant under the Cannabis Act, having submitted its Statement of Readiness and Evidence Package for a Standard Cultivation License, in addition to a Research and Development License. CLC’s facility is comprised of a 32-acre property, which includes over 870,000 square feet of outdoor grow space, offices, propagation and drying rooms.  CLC plans to cultivate cannabis using strains specifically developed for outdoor cultivation and it is planning to produce up to 17,700 kg from its 32-acre facility before developing it’s adjoining 99-acre expansion property, which will bring it’s cultivation footprint to over 4.35 million square feet or over 88,000 kg of low-cost, high-quality, sun-grown cannabis annually.For more information about CLC, please visit: www.clcannabis.comNote Regarding Forward-Looking Information and StatementsForward-Looking Information: This news release includes certain statements that may be deemed “forward-looking statements”. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “would”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. These statements speak only as of the date of this News Release. Actual results could differ materially from those currently anticipated due to a number of factors and risks including various risk factors discussed in the Company’s disclosure documents which can be found under the Company’s profile on www.sedar.comOn behalf of:Joel Dumaresq
Joel Dumaresq
CEO and Director

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