TIDMZAIM
RNS Number : 3736L
ZAIM Credit Systems PLC
30 April 2020
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securities laws of such jurisdiction
For Immediate Release
30 April 2020
Zaim Credit Systems Plc
("Zaim" or the "Group")
First quarter 2020 trading update
Zaim Credit Systems plc (the 'Group' or 'Zaim'), the Russian
focused fintech group providing financial inclusion for those
consumers who are not well served by mainstream lenders, is pleased
to announce a post period end trading update from its wholly owned
subsidiary, Zaim-Express LLC, ('Zaim-Express') in respect of the
first quarter of 2020.
Update on COVID-19 situation in Russia
The Russian authorities are taking steps aimed at containing the
spread of COVID-19, including a travel ban with other countries,
social distancing initiatives and a holiday period in Russia from
30 March to 11 May, that could be extended further based on the
epidemiological situation. The authorities have also enacted the
closure of non-essential businesses in Moscow and Moscow Region,
where Zaim's main operations are focused and announced a set of
economic measures and subsidies aimed to help affected business and
the population.
In line with the current official guidance and the rest of the
microfinance sector in Russia, Zaim continues operating via its
physical stores during the holiday, as it provides a critical
service supporting the primary needs of the Russian population as
well as through its online presence.
Prior to Government regulations in respect of COVID-19, Zaim had
proactively implemented strict health and safety policies
specifically tailored to COVID-19, including working from home for
the entire head office staff, taking all necessary disinfection
measures in our stores, such as using hand sanitizers, medical
masks and more frequent cleaning of the customer zone. The clients
can enter the shop in compliance with the social distancing
prescriptions or one at a time. We continue following all the
recommendations of local health authorities and the World Health
Organisation.
As part of its growth strategy, Zaim has developed a convenient
online platform, allowing customers to receive and repay loans via
the internet or by phone in less than 10 minutes without leaving
their homes, which is an important option in the era of social
distancing that is critical for containing the pandemics. We can
also deliver our Zaim MasterCard debit card to our clients and
provide the loans through these cards.
Our strong capital and liquidity positions makes us confident in
the sustainability of the Company's operations. We are going to
continue providing our customers easy and convenient access to
affordable financial solutions, which is very important in this
volatile environment
First quarter 2020 trading update
As previously stated, the Board believes that the amount funded
and the weighted average default rate are the key metrics for
monitoring the performance of the business and presents these in
the table below for 2019 and the first quarter of 2020, except for
weighted average default rate that will become available after the
end of Q2 2020:
Quarter Ended Mar Jun 19 Sept Dec 19 March
19 19 20
Amount Funded (GBP'000) GBP2,322 GBP2,226 GBP2,196 GBP2,284 GBP2,
5 4 9
--------- --------- --------- --------- --------
Weighted Average Default
Rate 9.0% 7.5% 5.6% 8.1% See note
--------- --------- --------- --------- --------
We have seen an 11.6% growth in the amount funded in Q1 2020
compared to Q4 2019 driven by strong demand at the beginning of the
year and utilization of financial resources obtained during Zaim's
IPO on 4 November 2019.
Weighted average default rate increased from 5.6% in Q3 2019 to
8.1% in Q4 2019. This was partially due to the more aggressive
marketing of Zaim loans in November and December 2019, increasing
the proportion of loans made to new customers from around 5% to 7%
in November and 15% in December. New customers usually carry higher
risk of default than repeated customers do.
In addition to the slightly higher ratio of new customers, it is
the Board's view that the impact of coronavirus pandemic has
reduced customer's ability to repay loans which has slightly
affected the default rate for December due to lower levels of
repayments in March and April 2020 for the funds advanced in that
month. In Q1 2020 the share of loans from new customers was 15.30%
of the amount funded. Zaim has continued to improve its credit
scoring system and expects to continue to see the benefits of this
over the coming months.
Increase of loan book
The Group continued to steadily increase its loan book during Q1
2020 taking care not to compromise the quality of customers and to
focus in minimizing the default rates whilst continuing to attract
new business.
Amounts funded in each of the months of the first quarter of
2020 are set out in the following table:
Period Amount Issued Amount Issued Amount Issued
Online Offline Total
Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000
January GBP 110 GBP 740 GBP 850
-------------- -------------- --------------
February GBP 122 GBP 737 GBP 859
-------------- -------------- --------------
March GBP 114 GBP 726 GBP 840
-------------- -------------- --------------
Total First GBP 346 GBP 2,203 GBP 2,549
Quarter
-------------- -------------- --------------
Zaim continued to generate momentum for a continued increase in
the amount funded since Q3 19 and into the first two months of the
year, however this stalled slightly in March as a result of
COVID-19.
Network optimisation
As a direct result of the continued strategy of optimization of
the business model and ensuring maximum returns for shareholders,
the number of stores have been reduced from 92 outlets as at 31
December 2019 to 76 outlets as at 27 April 2020. The stores that
were closed were the weakest performing and indications were that
given the slow recovery in amounts funded post IPO and the
anticipated reduction in demand due to COVID-19 these should be
closed. Of the remaining 76 stores, 4 outlets are not in operation
as they are located in shopping centers that are closed due to the
coronavirus prevention measures.
Recent trading
In April 2020 we have seen a significant decrease in demand,
leading to an expected approximate 44% decrease in the amount
funded in April 2020 compared to March 2020. This is a direct
result of the reduction in footfall throughout Moscow resulting
from the measures enacted regarding COVID-19.
Outlook
It is difficult to foresee how long the current Government
measures in response to COVID-19 will be in place for or how
customers will behave once the restrictions are lifted. As such
Zaim is taking a prudent course of action by not seeking to grow
the loan book, in line with its previous strategy, beyond its
current level until the demand resumes and the ability of the
Company to accurately forecast future cashflows reliably returns.
As such it is the current strategy of Zaim to run its loan book on
a breakeven cash flow basis, that is to only lend out the funds
that are received from loans until more certainty of the wider
economic impact has been established. This has the aim of
protecting the Company from potential unexpected losses and
deterioration in liquidity due to delays or defaults in
collection.
In addition to restricting any new loans granted to the cash
inflows from existing customers, Zaim has enacted a series of
measures to reduce the cost base of operating its physical stores,
this has been achieved by way of negotiating rent reductions with
landlords as well as salary reductions for staff.
Together these measures are expected to enable Zaim to navigate
the current uncertainty and be well positioned to capitalize on the
expected rebound in business opportunities once restrictions start
to be eased.
Our strong capital and liquidity positions makes us confident in
the sustainability of the Company's operations and it is the
intention to re-start our growth plans as soon as we will have
clearer view of the situation.
Timing of Year-end results
Given the recent global issues effecting audit timelines and
specifically international travel, the Company intends to rely upon
an extension granted by the FCA for the filing deadline for annual
results for the year ended 31 December 2019. This extension grants
a further 2 months for the publication of the results due to the
exceptional circumstances around the COVID-19 pandemic.
It is the intention of the Group to releases its Annual report
including audited results for the year ended 31 December 2019
within the extended timeframe of 30 June 2020.
Timing of the Annual General Meeting of shareholders
The timing of the 2020 AGM will be announced to shareholders at
the same time as the annual results and is expected to be held in
London. Due to the Covid-19 outbreak in the UK and globally, Stay
at Home Measures were passed into law in England and Wales on 26
March 2020, prohibiting public gatherings of more than two people
who do not live in the same household, unless essential for work
purposes.
In the light of this and following published legal guidance we
are not permitting shareholders to attend the AGM this year. We
therefore request that shareholders vote by proxy to ensure that
votes are cast.
Siro Cicconi, CEO commented:
"The COVID-19 outbreak became the key challenge for us in this
moment of 2020 and the main source of uncertainty for Russia and
global economies. We had to change our plans to adopt to the new
reality. The wellbeing of our customers and colleagues is a top
priority for us and I have been very pleased with how we have
adapted our business practices to ensure that we continue to safely
support our customers.
The long-term impact of COVID-19 on the Russian economy remains
largely uncertain. While we have solid experience in running our
business during crisis periods, we feel the current "lockdown"
period is completely new to us, and we have decided to reduce the
loan amounts issued in order to keep business at a financial and
economic break-even level for the period of "lockdown". This will
protect the Company from potential unexpected losses. We will
re-start our growth plans as soon as we will have clearer view of
the situation".
Enquiries:
Zaim Credit Systems Plc
Simon Retter
Siro Cicconi Tel: +44 (0) 73 9377 9849
Alex Boreyko Tel: +7 925 708 98 16
investors@zaimcreditsystemsplc.com
Beaumont Cornish Limited
Roland Cornish / James Biddle Tel: +44 (0) 20 7628 3396
Optiva Securities Limited
Jeremy King / Vishal Balasingham Tel: +44 (0) 20 3137 1902
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END
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