Letter from the CEO

FY 2016 has been an exceptional year in many respects. In operational terms, 2016 was again a year of substantial growth for CreditAccess Asia. Its activities in India continued their solid growth path in line with previous years, in Indonesia growth gained momentum by leveraging its expanded branch network, while in the Philippines the organisation accelerated the roll out of new branches to reach the necessary scale. Furthermore, preparations were made to expand our activities into Vietnam where we expect to start operations by the end of 2016.

To finance our growth strategy, we have established a strategic partnership with Olympus Capital Asia (“Olympus”) whereby they have invested US$30 million to fund our operations. Given their extensive experience in financial services and presence in our key markets, Olympus is the ideal partner to help accelerate our growth plans driven by tapping new geographical markets in Asia and via the expansion of our product range to meet our clients’ needs.

Results boosted by robust top line growth and economies of scale
Interest income and fees grew 81% to € 74 million in FY 2016 which was driven by the strong growth of loan book. This fast growth pace was achieved by all our operations although the Philippines reported the fastest growth from a low level due to its startup phase. The operating result came in at € 5.1 million, compared with € 1.9 million in FY 2015, fueled by top line growth and our focus on cost containment. The net result of the Group amounted to € 2.9 million negative. Similarly to FY 2015, the consolidated net result was affected by a number of extraordinary nominal items, in particular linked to the agreements for the purchase of the non controlling interest of Grameen Koota. Had these items been excluded from the profit and loss accounts, the net result would have been € 4.5 million positive, a substantial improvement compared with € 1 million in FY 2015.

Sound financial position retained in FY 2016
The net cash flow for the period was € 10.3 million, whereas the operating activities generated a cash flow of € 154 million negative (typical dynamic of a growing business where disbursements for new loans are higher than reimbursement from old loans), and the financing activities contributed to € 160.8 million net cash flow. Finally, the investment activities contributed € 3.5 million. The debt to adjusted capital ratio remained solid at 410%. Portfolio at risk 30 days remained stable compared to FY 2015, or as low as 0.2% on the total loan book. Overall, CreditAccess’ sound financial position remained as strong as ever in FY 2016.

New growth opportunity in Vietnam
Management attention in FY 2016 was not only geared towards increasing our existing activities, but also towards exploring new growth opportunities in the region. In line with our strategy of starting up new activities in one or two more countries by 2020, we found exciting possibilities in Vietnam to expand and diversify our activities. With the organisational template and strategy in place and the hiring of key managers underway, we expect to start up operations in the course of this financial year.

Focus on Corporate Social Responsibility across the Group
CreditAccess’ Corporate Social Responsibility policy forms an integral part of its day-to-day operations. It focuses on the well-being of its clients, employees and the local communities it operates in. To accomplish this, the Company aims for the highest level of transparency, integrity, fairness and professionalism in all its operations. In the past year, we have invested in the certification of our businesses in order to receive the Client Protection Certification (“CPC”) for each of the Operating Companies. CAA-GK received a re-certification, while CAA-BAV received the pre-assessment report of the CPC Certification in December 2015. We will continue our efforts to have the entire Group certified, since we are convinced that our success starts with satisfied clients who understand and appreciate our products.

Way forward
The Company will continue to focus on executing its ambitious growth plans, thereby maintaining its leading position in the microfinance industry across India and Southeast Asia. This entails the expansion of its position in the geographical markets in which it is active, increasing its loan portfolio and client base organically, while at the same time focusing relentlessly on optimising operational processes, leveraging cross synergies and implementing technological innovations to stay ahead of competition. Furthermore, we will start up activities in Vietnam which should only slightly contribute to the results in financial year FY 2017 and FY 2018, but will have a great potential for the years thereafter. All in all, we believe that these are exciting times for all of us, expanding the Company in a profitable manner, maintaining its competitive and leading position, and taking the next step in becoming a publicly listed Company in due course. The successfull IPO of Equitas on the Mumbai Stock Exchange, which was then followed by the listing of Ujjivan (India) mark, very important graduation for the whole industry which is now backed by the large mainstream financial investors and no longer by only a few specialty or industry focused financial players. Last but not least, the Company is currently in advanced negotiation with strategic institutional investors for a primary issue of capital of up to € 65 million and for the early conversion of certain convertible debt financing securities. The Board of Directors will present the outcome of the negotiations to the General Meeting of Shareholders of the Company for final deliberations. This round of capital increase is instrumental in meeting the financial needs of the Group under the strategic plan and would mark a further strengthening of the shareholders base which is a key success factor in view of the listing on the capital markets. On behalf of the Board of Directors, I would like to thank all our staff whose hard work and commitment has made these achievements possible. I look forward to your continued efforts in maintaining our competitive position and building on our future success every day.

Paolo Brichetti
Chief Executive Officer

Paolo Brichetti
Chief Executive Officer