In the third quarter of 2016 Capitalia group of companies increased consolidated turnover to EUR 662 061 ensuring 54% (annualized) growth of sales compared to the previous financial year. Company reported small losses while the total assets grew to EUR 2 922 577. During this reporting quarter Capitalia concentrated its efforts on growing the loan portfolio as well as initiating preparations that would allow to increase efficiency and profitability of the operations.
Unfortunately Capitalia did not manage to reach its target and report operating profit in this quarter. This is a result of two factors. Firstly, in order to continue the established growth traction we have been experimenting (and occasionally failing) with various marketing and customer attraction campaigns. Further, a number of one-time costs have been associated with establishing operations in Estonia. Apparently growth costs. Secondly, we have experienced a default of a larger client in Latvia as a result of which our losses from this one transaction can reach up to EUR 35 thousands. Despite our carefully developed credit scoring policy, in our willingness to work with larger and more recognizable clients we had (in this case) overlooked a number of important warning flags. Needless to say, after this experience we have re-evaluated our approach in decision making to avoid such costly mistakes in the future.
Thanks to our cooperation with marketplace lending platform Mintos through which we have refinanced about half of our active loan portfolio, Capitalia has managed to jump forward one large development stage. Our target in the last quarter of this year is to solidify our operations at his level. We are intensifying and re-evaluating our cooperation with debt collection companies, renewing marketing strategy and strengthening the balance sheet. With regards to our balance sheet, we have increased the share capital of the company to EUR 500 thousands and are in preparations for new rounds of issue of secured and un-secured bonds. The aim of Capitalia is to finish financial year 2016 with a profit and reach as close to EUR 1 million turnover as possible.