Lion Finance Group Plc · LSE:BGEO
Lion Finance — BGEO Group — Investor Day (November 2016)
28 slides from Lion Finance's investor day presentation, Nov 22, 2016
Slide 1: Georgia Macroeconomic Update
INVESTMENT PLATFORM BGEO BECOME GEORGIA GEORGIA MACROECONOMIC UPDATE Speaker: Archil Gachechiladze, Deputy CEO at BOG BGEO Investor Day 22 November 2016 | Tbilisi, Georgia www.bgeo.com
Slide 2: Opportunity to establish itself as a Regional Service Hub
opportunity to establish itself as a Regional Service Hub Hospitality Logistics ye Key facts = Area: 69,700 sq km = Population: 3.7 min " Life expectancy: 77 years * Official language: Georgian = Literacy: 100% = Capital: Tbilisi = Currency (code): Lari (GEL) = Real GDP average 10 yr growth rate: 5.
Slide 3: Access to a 900 million market without customs duties
access to a 900 million market without customs duties WTO member since 2001 Very simple and service-oriented customs policy and administration c. 80% of goods free from import tariffs No quantitative restrictions Preferential Trade Regimes: FTA with Turkey, Ukraine and CIS countries (Russia, Kazakhs
Slide 4: Significant progress in narrowing distance to frontier
Significant progress in narrowing distance to frontier 4
Slide 5: Georgia western-style, strong institutions
Georgia western-style, strong institutions Worldwide Governance Indicators, 2015 Georgia’s progress in Worldwide Governance Indicators Georgia vs. others 2010 vs. 2015 100 90 @ OECDhighe CECDhighg, OECD HIN OECD highg OECD high Political Stability and Absence of 2015 80 income mm” income @ “income ©
Slide 6: Transparency International and Trace International rankings
Source: Transparency International, 2016 Source: Trace International, 2014 6
Slide 7: Georgia Greater Economic Freedom
Georgia Up from 99 in 2005 Greater Economic Freedom Top 12 in Europe region out of 44 countries Frontier Markets average 7
Slide 8: Exposure to partner countries diversified
exposure to partner countries diversified Top 5 Export markets in 9M16 Top 5 FDI providers in 1H16 a <3 Ben Top 5 remitting countries in 9M16 a 83 3. MG: ie Top 5 countries by international arrivals in 10M16 Source: GeoStat, NBG, GNTA BGEO BECOME GEORGIA www.bgeo.com il
Slide 9: Reforms driven success
reforms driven success Productivity gains have been the main engine of growth Average real GDP growth over 2006-15 during 2006-15 (contributions to growth) 6% 5.1%) 6% 5% 5% 4% 4% 3% 3% Capital 2% 2% tock 1.7% 1% 1% 0% 0% -1% -1% -2% -2% TSP SGCGCGGTNDTGGCOTGHFUSPRAUGBES EBcCoSc SES ec eC aeSZ5@2c a
Slide 10: Employment growth while keeping labor costs manageable
ment grow while keeping labor costs manageable Agriculture remains the largest employer, though the share Unemployment rate fell to 12.0% in 2015 of services increasing 1800 18% 100% 90% 17 169 50 6% 80% 1700 14% 70% 60% 1650 12% 50% 1600 10% 40% 5 30% 1550 8% 20% 1500 6% 10% gs 585 8 8 € =E € 2 = 2
Slide 11: Tourism rapidly growing contribution
Tourism rapidly growing contribution Tourism revenues c8x higher over 2005-15 ... Which increased contribution of the tourism sector 9 9 2,000 | Tourism revenues up 13.2% y/y in 1H16 20% 60% As of 2014 60% 1,800 2016 revenues expected at US$ 2.2bn, +14% y/y 18% 50% mTourism receipts to GDP, % 50% 1,
Slide 12: Tourist arrivals growth by country
5.0mn +8.2% 5.4mn 5.0mn +8.2% 5.4mn +48.0% +4.4% +13.4% +0.1% -5.0% +11.0% +19.9% -9.1% 12
Slide 13: Absorbing external shocks through flexible exchange rate regime
(er-olce/-WVEM ice olar-lm-veeareini(esy ADSOrbing external shocks through flexible exchange rate regime Currency weakening vs. USD 60% 53.0% 95.2% National bank reserves change 10% 58% 2.9% 4.6% 10% 0% 50% 44.7% 46.3% 47.1% 0% 40% 35.8% -10% -10% 30.2% 31.0% -20% -20% 30% -30% -30% 20% -40% -40% 10
Slide 14: Georgia vs. CIS, 2009 crisis
Georgia vs. CIS, 2009 crisis Global financial crisis vs. world commodity price shock Georgia vs. CIS, 2014-15 commodity price shock 14% =*=Georgia, real GDP 14% 8% ant real GDP 8% 12% - growth 12% 10% =e = Be eal GDP growth 10% 6% —+=CIS, real GDP growth 6% — _— 8% | * . 8% . 6% —— — 6% 4% So — 4% 4
Slide 15: Current account deficit financed mainly through capital goods imports
Pol Mecano melileiges mainly through capital goods imports Current account balance, % of GDP Georgia vs. others - wider CA deficit explained by higher net FDI, 2015 30% 15% 15% 20% 10% ™net FDI to GDP, % 10% G G y 10% 5% =CA deficit to GDP, % 5% 0% 0% 0% ~10% 5% 5% -20% 10% 10% -30% -15% -15% Sa GPs
Slide 16: Government's four-pillar reform program
maces meme 4 pillar reform program Government's 4 pillar reform plan to boost growth Corporate income tax revenues rebounded in Estonia after 2 years from reform in 2000 1. Further liberalizing tax and customs procedures 2.0% Introduction of the Estonian model, which envisages the application of cor
Slide 17: Private investments driving growth
Private investments driving growth Increase in public investments will accelerate private investments and push growth further Source: GeoStat, MOF www.BGEO.com 17 November 2016
Slide 18: www.BGEO.com November 2016
• • • • • • • • • www.BGEO.com 18 November 2016
Slide 19: Exports and re-exports
-350 -250 -150 50 -300 -200 -100 -50 0 150 200 250 300 100 Jan-14 Feb-14 Mar-14 Apr-14 suffered May-14 Jun-14 Re-exports Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 www.BGEO.com 80 -80 -40 0 40 120 160 May-15 November 2016 Geo-originated exports, US$ mn Jun-15 Jan-14 Jul-15
Slide 20: Inflation
40 80 120 160 200 240 -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Jan-11 Jan-13 May-11 May-13 Sep-11 Jan-12 Sep-13 Total May-12 Jan-14 Sep-12 Jan-13 May-14 May-13 Sep-14 www.BGEO.com Sep-13 November 2016 Jan-14 Jan-15 Core (non-food, non-energy) May-14 Non-energy May-15 ( Sep-14 Jan-15 Sep-15 May-15 J
Slide 21: Reserves and exchange rate
3.5 3.5 3.0 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 Jul-15 Jun-13 Jan-13 Nov-13 Sep-14 Apr-14 Feb-15 Dec-15 Oct-16 May-16 Gross International Reserves, US$ bn Net Foreign Assets, US$ bn 250 220 Net purchase of US$ 38mn YTD 120 200 US$ sale REER, Jan 2013=100 NEER, Jan 2013=100 14
Slide 22: Fiscal deficit and operating surplus
8% 8% 8% 2015E 8% 6% 6% 7% 2016F 7% 4% 4% 6% 6% 2% 2% 5% 5% 0% 0% -2% -2% 4% 4% -4% -4% 3% 3% -6% -6% 2% 2% -8% -8% 1% 1% -10% -10% 0% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F Estonia Belarus Turkey Armenia Lithuania Poland Bulgaria Georgia Croatia Russia Operating surplus to GDP, % Fis
Slide 23: Public debt
100% 100% 90% 2014 change 2014-16 90% 80% 80% 70% 70% Multilateral 60% 60% 55% 50% 50% Weighted average 40% 40% Domestic Other Interest rate 1.96% 30% 30% 22% 78% 20% 20% Contractual 10% 10% maturity 21 years 0% 0% Bilateral Serbia Bulgaria Bosnia & Herz. Belarus Armenia Poland Ukraine Kazakhstan Ru
Slide 24: Kazakhstan Azerbaijan
6% 5.2% 6% 5% 5% 4% 3.4% 4% 3.0% 3.0% 3.0% 2.8% 3% 2.5% 2.5% 3% 2% 1.4% 2% 1.1% 1% 0.6% 1% 0% 0% -1% -0.5% -1% Moldova Estonia Lithuania Ukraine Turkey Belarus Armenia Georgia Kazakhstan Bulgaria Azerbaijan Russia www.BGEO.com 24 November 2016
Slide 25: Questions?
INVESTMENT PLATFORM BGEO BECOME GEORGIA QUESTIONS? BGEO Investor Day 22 November 2016 | Tbilisi, Georgia www.bgeo.com
Slide 26: Country comparison rankings
Turkey 3.2 Hungary 19.2 Georgia 3.7 Latvia 18.9 Latvia 3.8 Georgia 17.3 Poland 4.4 Estonia 15.8 Lithuania 5.5 Moldova 15.7 Macedonia 7.2 Turkey 15.5 Russia 9.7 Romania 12.3 Hungary 10.0 Macedonia 12.2 Moldova 11.1 Belarus 11.4 Romania 11.3 Lithuania 8.8 Belarus 11.5 Poland 8.7 Bosnia & Herz. 12.1 Bo
Slide 27: www.BGEO.com November 2016
www.BGEO.com 27 November 2016
Slide 28: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements that are based on current beliefs or expectations, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.