Lion Finance Group Plc · LSE:BGEO
Lion Finance — BGEO Group — Q1 2017 Earnings Presentation
108 slides from Lion Finance's earnings presentation, May 2017
Slide 1: Capturing Growth Opportunities: 1Q17 results
CAPTURING GROWTH OPPORTUNITIES Investor Presentation: 1Q17 results
Slide 2: Disclaimer: Forward Looking Statements
DISCLAIMER Forward Looking Statements Disclaimer This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financi
Slide 3: Content
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 Georgian Macro Overview 73 Appendices 94 3
Slide 4: BGEO Portfolio of Business
BGEO PORTFOLIO OF BUSINESS Banking Business Investment Business Retail Corporate Investment GGU GHG BGEO Banking Banking (Healthcare) (Utility & Energy) Group Aldagi BNB Wealth m2 Teliani Valley (P&C (Bank in Management (Real Estate) (Beverages) Insurance) Belarus) 4
Slide 5: BGEO Capital Allocation
BGEO Capital allocation Data as of 31 March 2017 unless otherwise stated GEL 3,166.8mln1 Banking Business Investment Business Cash buffer 11% At a glance 45% 44% GEL 1,426.6mln GEL 1,405.0mln GEL 335.2mln 1Q17 ROAE 27.2% 18.3% 3.2% 34.0% NMF 951.3 1,000 1,000 1,000 900 900 900 800 Of which, GEL 99.5
Slide 6: BGEO Profit Contribution
BGEO PROFIT CONTRIBUTION Data for 1Q17 unless otherwise stated GEL 108.2mln Banking Business Investment Business 12% At a glance 8% Investment Business, excluding GHG GHG 80% GEL 86.9mln GEL 21.3mln 60 60 50.8 50 50 40 GEL millions GEL millions 40 By 28.3 30 30 businesses 20 20 12.6 10 10 6.5 3.
Slide 7: BGEO Shareholder Structure and Share Price
BGEO Shareholder structure and share price BGEO shareholder structure BGEO top shareholders As of 31 March 2017 As of 31 March 2017 2% Unvested and unawarded shares 4% for management and employees Rank Shareholder name Ownership % 5% Vested shares held by 1 Harding Loevner Management LP 8.13 10% man
Slide 8: Delivering on 4x20 Strategy
DELIVERING ON 4x20 STRATEGY We are a Georgia Focused INVESTMENT PLATFORM Banking Business Investment Business 23.5% 1 21.7% 22.1% 3 121% IRR from GHG IPO ROAE 20.6% Min. IRR 20%+ 77% IRR from m2 Real Estate of 20% projects 2014 2015 2016 1Q17 2 39.5% 4 Retail loan 35.3% 19.7% 34.1% 17.7%* 18.3%* boo
Slide 9: Solid Regular Dividend and Capital Return Track Record
Solid regular dividend and capital return track record Regular dividends Capital return Capital return: GEL 113.0mln share buy-backs Share buyback and cancellation: since 2015 • A purchase and cancellation Regular dividends: GEL 333.7mln cash dividend paid programme of ordinary shares since 2010 DPS
Slide 10: Capital Returns: 3-Forms, 5-Year Cycle
Capital returns: 3-forms, 5-year cycle 3-forms 1 2 3 of Cash Dividends Stock dividends Share buy-back capital return Strategy 50% of regular dividends paid 50% of regular dividends paid Announced during 2015-2019 during 2020-2024 5-year cycle for capital return 2014 5 years 2019 5 years 2024 10
Slide 11: Robust Corporate Governance: Board of Directors
BGEO Robust corporate governance compliant with UK Corporate Governance Code Board of Directors of BGEO Group PLC 6 non-executive Board of Director members; 6 Independent members, including the Chairman and Vice Chairman Neil Janin, Chairman of the Board; Chairman of the Kim Bradley, Chairman of the
Slide 12: Robust Corporate Governance: Management
BGEO Robust corporate governance compliant with UK Corporate Governance Code Senior Executive Compensation Policy applies to top executives and envisages long-term deferred and discretionary awards of securities and no cash bonuses to be paid to such executives of Georgia JSC Bank Irakli Gilauri, Gr
Slide 13: Content
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 Georgian Macro Overview 73 Appendices 94 13
Slide 14: BGEO P&L Results Highlights
BGEO P&L results highlights Quarterly P&L BGEO Consolidated Banking Business Investment Business 1Q17 1Q16 Change 4Q16 Change 1Q17 1Q16 Change 4Q16 Change 1Q17 1Q16 Change 4Q16 Change GEL thousands unless otherwise noted y-o-y q-o-q y-o-y q-o-q y-o-y q-o-q Net banking interest income 160,666 128,852
Slide 15: BGEO Balance Sheet Highlights
BGEO Balance sheet highlights Balance Sheet BGEO Consolidated Banking Business Investment Business Change Change Change Change Change Change GEL thousands unless otherwise noted Mar-17 Mar-16 y-o-y Dec-16 q-o-q Mar-17 Mar-16 y-o-y Dec-16 q-o-q Mar-17 Mar-16 y-o-y Dec-16 q-o-q Liquid assets 3,606,926
Slide 16: Sound Revenue Growth and Organic Growth in Operating Expenses
BGEO Sound revenue growth & organic growth in operating expenses Revenues +36.6% -1.9% 350 305.5 299.5 300 78.9 80.8 250 219.2 GEL millions 200 37.7 150 232.5 221.4 100 184.1 50 0 (2.6) (5.9) (2.7) 1Q16 4Q16 1Q17 -50 Banking Business Investment Business Eliminations Operating expenses +45.3% +3.1% 1
Slide 17: BGEO Balance Sheet, March 2017 (1/2)
BGEO Balance sheet, 31 March 2017 (1/2) BGEO Banking Business +25.1% +18.3% 15,000 14,000 12,606.5 13,000 12,000 10,678.8 10,077.6 2,297.3 18.2% 11,000 7.5% 10,000 9,030.1 803.8 1,354.0 Assets 9,000 8,000 759.1 60.6% Gel 7,000 84.7% 6,470.8 10,678.8 6,000 5,000 5,394.6 Millions 9,030.1 3,000 4,000 3
Slide 18: BGEO Balance Sheet, March 2017 (2/2)
BGEO Balance sheet, 31 March 2017 (2/2) GHG m2 Real Estate GGU 16.4% -1.5% 420.3 1,200 33.5% 350 450 1,109.5 300.2 295.7 400 361.1 300 74.3 17.7% 1,000 28.4% 350 45.2% 250 94.9 83.9 66.7 501.1 300 800 737.8 Assets 200 250 600 250.2 34.1% GEL 150 87.1 101.0 200 82.3% 346.0 Millions 400 54.8% 100 150
Slide 19: Content
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 Georgian Macro Overview 73 Appendices 94 19
Slide 20: BOG: The Leading Bank in Georgia
BOG The leading bank in Georgia Balance Sheet Leading market position1 in Georgia by assets (33.0%), loans (32.0%), Banking Business client deposits (32.8%) and equity (27.0%)2 CAGR 2013-1Q17: +18.5% +19.6% +20.1% +19.4% +9.7% Underpenetrated market with stable growth perspectives: Real GDP 12,0
Slide 21: BOG: The Competition
BOG The competition Peer group’s market share in total assets Peer group’s market share in gross loans 45% 40% 36.4% 37.9% 40% 35% 33.0% 6.5% 35% 32.0% 7.6% 30% 29.9% 30.3% 30% 25% 25% 20% 16.0% 20% 16.8% 15% 15% 10% 6.5% 10% 7.6% 5.4% 4.3% 4.9% 4.7% 4.5% 4.1% 5% 5% 0% 0% BOG TBC BR LB PCB VTB Other
Slide 22: Diversified Asset Structure and Loan Portfolio
Banking Business Diversified asset structure and loan portfolio Total asset structure | 31 March 2017 Liquid assets | 31 March 2017 YTD Loan Portfolio Growth** Banking Business Banking Business Total: GEL 10.7bln Total: GEL 3.4bln YTD change: -1.6% 1.3% 2.1% 200 Other Other liquid Stable loan portfo
Slide 23: US$ Loan Portfolio Breakdown
Banking Business US$ Loan portfolio breakdown Highlights 41.1% of Retail Banking loans were denominated in US$ with non-US$ income For RB: Loans 15 days past due were 1.4% as of 31 March 2017, compared to 1.1% a year ago and 1.2% as of 31 December 2016 30.8% of Corporate Investment Banking Loa
Slide 24: Resilient Loan Portfolio Quality (1/2)
24 Banking Business Resilient loan portfolio quality (1/2) NPLs and NIM NPL composition Banking Business Banking Business 86.7% 87.1% 400 7.7% 9% 350 100% 7.6% 7.5% 7.4% 83.4% 294.8 311.9 350 8% 90% 300 47.6 294.8 7% 67.5% 38.2 80% 300 250 241.1 241.1 311.9 6% 70% GEL millions GEL millions 250 34.7
Slide 25: Resilient Loan Portfolio Quality (2/2)
Banking Business Resilient loan portfolio quality (2/2) Cost of Credit risk | quarterly Cost of Risk | quarterly 38.0% 10bps Banking Business Banking Business 80.0 4.5% 4.2 -180bps 70.9 -31.9% 70.0 4.0% 3.5% 60.0 1.9% 32.2 3.0% GEL millions 50.0 2.5% 40.0 2.0% 30.0 1.5% 48.3 2.3% 2.3% 2.4% 20.0 38.7
Slide 26: Strong Liquidity (1/2)
Banking Business Strong liquidity (1/2) Liquid assets to total liabilities NBG liquidity ratio Banking Business BOG standalone 36.8% 38.3% 37.8% 46.2% 12,000 40% 6,000 50% 37.7% 37.4% 32.3% 45% 9,819 35% 5,000 5,512 10,000 9,243 35.0% 5,403 40% 7,856 30% 4,871 35% GEL millions 8,000 4,000 25% 30% 5,
Slide 27: Strong Liquidity (2/2)
Banking Business Strong liquidity (2/2) Liquidity coverage ratio & net stable funding ratio Foreign currency VAR analysis* JSC Bank of Georgia standalone JSC Bank of Georgia standalone 60 250% 50 199.5% 200% 163.8% 178.1% 40 32.2 GEL millions 151.5% 30 23.7 150% 20.0 111.9% 17.3 104.5% 101.6% 20 12.
Slide 28: Funding Structure is Well Established
Banking Business Funding structure is well established Interest Bearing Liability structure | 31 Mar 17 Well diversified international borrowings | 1Q17 Banking Business Interest Bearing Banking Business Liabilities GEL 9.1bn Others borrowings, Debt GEL 206.0 mln, securities 9.5% issued, GEL Other d
Slide 29: Strong Underlying Performance
Banking Business Strong underlying performance Revenue growth | quarterly Operating expenses | quarterly Banking Business +20.2% Banking Business +14.4% 232.5 -4.8% 100 -8.2% 221.4 87.1 250 90 1.5 80.0 80 69.9 9.8 0.7 184.1 9.8 200 74.1 70 0.9 59.8 GEL millions 9.1 GEL millions 60 25.7 53.9 23.2 150
Slide 30: Focus on Efficiency
Banking Business Focus on efficiency Cost / Income | quarterly Banking Business 38.5% 38.0% 37.5% 37.9% 37.0% 37.5% 36.5% 36.0% 36.1% 35.5% 35.0% 1Q16 4Q16 1Q17 Revenue and operating expenses | quarterly Banking Business Operating Leverage: +3.3% q-o-q +5.7% y-o-y 250 232.5 221.4 184.1 GEL millions
Slide 31: Growing Income Notwithstanding the Pressure on Yields
Banking Business Growing income notwithstanding the pressure on yields Loan Yields | quarterly Banking Business 120% 14.4% 14.4% 14.0% 16% 14% 100% 12% 80% 10% 72.4% 71.3% 66.5% 60% 8% 6% 40% 4% 20% 33.5% 27.6% 28.7% 2% 0% 0% 1Q16 4Q16 1Q17 Net loans, FC, consolidated Net loans, GEL, consolidated Cu
Slide 32: Stable Cost of Funds
Banking Business Stable cost of funding Cost of Funds | quarterly One year US$ deposit rate * Banking Business Banking Business 9% 8.00% 5.2% 5.0% 8% 7.50% 5.0% 7% 6.50% 4.8% 6% 5.00% 4.6% 4.6% 5% 4.00% 4.6% 4% 4.00% 4.4% 3% 3.50% 3.50% 2% 4.2% 1% 4.0% 0% 1Q16 4Q16 1Q17 Cost of Customer Funds | quar
Slide 33: Excellent Capital Adequacy Position
Banking Business Excellent capital adequacy position NBG (Basel 2/3), capital adequacy ratios JSC Bank of Georgia standalone 18% 16.3%* 15.4%* 15.8% 16% 14% 11.2%* 12% 10.1%* 10.1% 10% 10.5% 8% 8.5% 6% 4% 2% 0% 31-Dec-16 31-Mar-16 31-Mar-17 Tier I Capital Adequacy Ratio NBG Tier I CAR min requiremen
Slide 34: Retail Banking Segments
Retail Retail Banking banking se Data as at 31 March 2017 for JSC Bank of Georgia standalone 1 2 3 4 MSME segments Micro, Small and Medium Emerging Retail Mass Retail Mass Affluent Business Clients 488.6 k 1,546.8 k 21.7 k 130.4 k Loans GEL 217.3 mln GEL 1,541.0 mln GEL 877.6 mln GEL 1,336.2 mln Dep
Slide 35: Retail Banking Financial Data, March 2017
Retail Banking Financial data, as at 31 March 2017 Balance sheet data Income statement data JSC Bank of Georgia Standalone 6% 25% Net Interest Total Loans Income 22% GEL 3,972.0mln GEL 111.2mln 62% 72% 13% Mass Retail & MSME (GEL 2,877.1 mln) Mass Retail & MSME (GEL 69.3 mln) Solo (GEL 877.6 mln) So
Slide 36: Leading Retail Bank in Georgia
Retail Banking Leading Retail bank in Georgia RB Client Data RB Portfolio breakdown Loans by products Operating Data, GEL mln 1Q2017 % of clients 2016 2015 2014 Total: GEL 3.9 bn Pawn loans Number of total Retail clients, of which: 2,187,499 2,141,229 1,999,869 1,451,777 Credit cards Automobile 1.6%
Slide 37: Retail Banking Financial Data
Retail Banking Financial data P&L Change Change GEL thousands, unless otherwise noted 1Q17 1Q16 y-o-y 4Q16 q-o-q INCOME STATEMENT HIGHLIGHTS Net banking interest income 111,511 82,832 34.6% 111,109 0.4% Net fee and commission income 22,245 19,239 15.6% 26,810 -17.0% Net banking foreign currency gain
Slide 38: Retail Banking Loan Yield, Cost of Deposits and NIM
Retail Banking Loan yield, cost of deposits & NIM RB Loan Yield RB Cost of Deposit 30% 6% 25.4% 25.4% 24.9% 4.8% 25% 5% 4.4% 4.0% 20% 17.4% 16.4% 15.9% 4% 3.5% 3.1% 3.0% 3.2% 2.7% 2.6% 15% 3% 10.9% 10.1% 9.4% 10% 2% 5% 1% 0% 0% Loan Yield Loan yield, GEL Loan yield, FC Cost of deposits Cost of depos
Slide 39: Corporate Investment Banking Financial Data
Corporate Investment Banking Financial data P&L GEL thousands, unless otherwise noted Change Change 1Q17 1Q16 y-o-y 4Q16 q-o-q INCOME STATEMENT HIGHLIGHTS Net banking interest income 37,949 38,250 -0.8% 39,168 -3.1% Net fee and commission income 5,666 7,020 -19.3% 8,133 -30.3% Net banking foreign cu
Slide 40: Corporate Investment Banking Loan Book and Deposits
Corporate Investment Banking Loan book & Deposits Highlights Portfolio breakdown, 31 March 2017 Loans by sectors Mining and Health and quarrying social work • No.1 corporate bank in Georgia Financial 3.6% 3.5% Other intermediation 6.4% 2.8% • Integrated client coverage in key sectors Top 10 CIB borr
Slide 41: Corporate Investment Banking Loan Yield, Cost of Deposits and NIM
Corporate Investment Banking Loan yield, cost of deposits & NIM CIB Loan Yield CIB Cost of Deposit 14% 13.1% 13.0% 9% 12.5% 8.0% 12% 11.1% 10.7% 10.8% 8% 10.2% 10.3% 6.6% 10.3% 7% 10% 6% 5.0% 8% 5% 4.5% 3.9% 3.6% 3.2% 6% 4% 3.1% 2.9% 3% 4% 2% 2% 1% 0% 0% Loan Yield Loan yield, GEL Loan yield, FC Cos
Slide 42: Investment Management: Unrivalled Platform for Profitable Growth
Investment Management Unrivalled platform for profitable growth 1 2 Wealth Management Research • Strong international presence: Israel • Sector, macro and fixed income (since 2008), UK (2010), Hungary (2012) and Turkey (2013). Planned expansion - Cyprus, Singapore, USA. coverage • International dist
Slide 43: Become Regional Private Bank
Become Regional Private Bank BECOME REGIONAL PRIVATE BANK INTERNATIONAL WM CLIENTS BOG & GEORGIA ASSETS GEORGIA Onshore economy with offshore benefits No capital gain tax on the internationally traded securities No accounts reporting liability High account safety Fast and easy way to open
Slide 44: Targets and Priorities Next 2-3 Years
Banking Business Targets & priorities next 2-3 years TARGETS & PRIORITIES NEXT 2-3 YEARS PRIORITIES STRATEGIC TARGETS 1 Grow Retail Banking share in loan book Target: 20%+ Increase ROAE 2 1Q17: 23.5% Product to Client Ratio Retail Banking Target: 20%+ De-concentrate Corporate Loan Book Growth 1Q17:
Slide 45: Targets and Priorities: Banking Business
Targets & priorities Banking Business Targets 1Q17 1Q16 1 ROAE 20%+ 23.5% 21.2% KEY targets Retail Banking 2 20%+ 34.1% 9.9% Growth Grow RB’s share in loan 1 book 65% 62.6% 56.5% Increase Mass Retail 2 Product to Client Ratio 3.0 1.7 1.7 PRIORITIES 3 Increase number ofclients Solo To 40,000 21,657 1
Slide 46: Content
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 • Georgia Healthcare Group (GHG) Georgian Macro Overview 73 Appendices 94 46
Slide 47: GHG Income Statement Highlights
GHG Income statement highlights P&L Change, Change, GEL thousands; unless otherwise noted 1Q17 1Q16 y-o-y 4Q16 q-o-q Revenue, gross 186,627 72,576 157.1% 136,031 37.2% Corrections & rebates (623) (410) 52.0% (790) -21.1% Revenue, net 186,004 72,166 157.7% 135,241 37.5% Revenue from healthcare servic
Slide 48: Georgian Healthcare Market and GHG Market Share
GHG Georgian healthcare market & GHG market share evolvement Healthcare services Pharmacy Medical insurance Key Segments Referral Hospitals Community Hospitals Ambulatory Clinics Pharmacy Medical Insurance General and specialty hospitals Basic outpatient and Outpatient diagnostic and Wholesaler and
Slide 49: GHG Long-term, High-growth Story
GHG Long-term, high-growth story Medium-term Target Long-term Target 2015-2018 (5-10 Year Horizon) (Beyond 10 Year Horizon) Georgia 2014 or most recent year(1) Georgia medium-term(1) EM 2014 or most recent year (2) Spending per capita (US$) 217 (Georgia) 502 1,076 Price inflation (heart surgery, US$
Slide 50: GHG Long-term, High-growth Prospects
GHG Long-term, high-growth prospects GHG HAS FULL PRESENCE IN GEORGIAN HEALTHCARE ECOSYSTEM Segment HOSPITALS AMBULATORIES PHARMACY INSURANCE Market GEL 1.2bln GEL 0.9bln GEL 1.3bln GEL 0.17bln (2015) Market shares BY REVENUE | BEDs BY REVENUE BY REVENUE BY REVENUE In 2015 18% | 27% <1% - 38% Now 20
Slide 51: GHG Focused Growth Strategy Through 2018
GHG Focused growth strategy through 2018 GHG HAS FULL PRESENCE IN GEORGIAN HEALTHCARE ECOSYSTEM Segment HOSPITALS AMBULATORIES PHARMACY INSURANCE Market share 25%+ 5% 30%+ 30%+ Targets 2018 (BY REVENUE) P&L targets • Doubling 2015 revenue by 2018 8.0%+ EBITDA • Combined ratio (2015 revenue was GEL 1
Slide 52: Content
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 • m2 Real Estate Georgian Macro Overview 73 Appendices 94 52
Slide 53: m2 Financial Highlights
m2 Financial highlights P&L Change, Change, Income Statement Highlights 1Q17 1Q16 y-o-y 4Q16 q-o-q Gel thousands, unless otherwise stated Revenue from sale of apartments 18,399 27,992 -34.3% 9,356 96.7% Cost of sale of apartments (17,109) (22,099) -22.6% (7,811) 119.0% Net revenue from sale of apart
Slide 54: m2 Financial Highlights: Balance Sheet
m2 Financial highlights Balance Sheet Change Change Balance sheet Mar-17 Mar-16 y-o-y Dec-16 q-o-q GEL thousands, unless otherwise noted Cash and cash equivalents 48,636 49,003 -0.7% 93,210 -47.8% Amounts due from credit institutions 179 - - - - Investment securities 1,515 2,001 -24.3% 2,842 -46.7%
Slide 55: m2 Projects: Residential and Hotel
m2 Performance highlights PROJECTS: RESIDENTIAL & HOTEL Apartment building: Apartment building: Apartment building: Apartment building: Apartment building: Chubinashvili street Tamarashvili street Kazbegi avenue Nutsubidze Street Tamarashvili Street II Completion status: 100% Completion status: 100%
Slide 56: m2 At a Glance
m2 At a glance – major player on Georgian real estate market 1 Residential Developments 2 Yielding Business Commercial space (offices, industrial Affordable housing Hotels properties, high street retail) Market: US$ 1.0bln1 Market: US$ 2.5bln2 Market: US$ 1.9bln3 Key As a residential real estate dev
Slide 57: m2 Strong Sales Performance
m2 Performance highlights STRONG SALES PERFORMANCE 76% of total apartments are sold Completed projects are sold out 2,894 apartments in total Completed apartments: 1.9% in stock Ongoing apartments: 55.0% in stock Number of apartments Number of apartments by projects 1000 900 In 819 stock, 800 704 So
Slide 58: m2 Hotel Strategy
m2 Hotel strategy 3-star hotel opportunity in Tbilisi Develop 3 hotels in next 7 years in Tbilisi Visitors in Georgia Limited supply catering to budget travelers 26.1% CAGR’03-16 6.4mln visitors in 2016, up 7.7% y-o-y Distribution of rooms in Tbilisi by accommodation type, 2017 7,000 6,351 5,898 6,0
Slide 59: m2 Targets and Priorities Next 2-3 Years
m2 Performance highlights TARGETS & PRIORITIES NEXT 2-3 YEARS 1 Unlocking land value by developing housing projects. Buy land opportunistically 2 Start developing 3rd party lands Accumulate yielding assets from own-developed projects : 3 • Mainly retain commercial real estate in residential building
Slide 60: Content: GGU
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 • GGU – Georgian Global Utilities Georgian Macro Overview 73 Appendices 94 60
Slide 61: GGU Income Statement Highlights
GGU Income statement highlights P&L Change, Change, GEL thousands; unless otherwise noted 1Q17 1Q16 y-o-y 4Q16 q-o-q Revenue from water supply to legal entities 18,336 16,986 7.9% 19,598 -6.4% Revenue from water supply to individuals 7,911 7,597 4.1% 8,636 -8.4% Revenue from electric power sales 1,1
Slide 62: GGU Statement of Financial Position Highlights
GGU Statement of financial position highlights Balance sheet GEL thousands; unless otherwise noted Change Change Mar-17 Mar-16 y-o-y Dec-16 q-o-q Cash and cash equivalents 13,910 10,117 37.5% 27,511 -49.4% Trade and other receivables 30,944 26,710 15.9% 29,499 4.9% Inventories 3,108 3,635 -14.5% 3,0
Slide 63: GGU Cash Flow Statement Highlights
GGU Cash flow statement highlights Cash flow Change, Change, GEL thousands; unless otherwise noted 1Q17 1Q16 y-o-y 4Q16 q-o-q Cash receipt from customers 30,582 29,254 4.5% 41,042 -25.5% Cash paid to suppliers (10,765) (10,047) 7.1% (8,066) 33.5% Cash paid to employees (3,758) (2,801) 34.2% (6,640)
Slide 64: GGU: A Privately-owned Natural Monopoly
GGU A privately-owned natural monopoly GGU is the only profitable water-utilities player in Georgia with plenty of efficiency rooms GGU is the largest privately owned water utility company in Company has strong execution track record & financial Georgia strength • 2 core activities: • Management tea
Slide 65: GGU Utility and Energy Business Strategy
GGU Utility and energy business strategy 1 UTILITY 2 ENERGY BUSINESS WATER UTILITY HYDRO & other renewables REVENUE 1Q17: GEL 28.6mln HYDROs: CURRENT 149MW operating STANDING EBITDA 1Q17: GEL 14.8mln 50MW ready to build 70% water losses 57MW pipeline HYDROs: 200MW operating MEDIUM EBITDA 2018: GEL 8
Slide 66: Renewable Energy Opportunity
Renewable Energy Opportunity 1 Underpenetrated Only 20-25% of Georgia’s hydro resources utilised industry 2 Cheap to develop US$ 1.5mln for 1MW development in Georgia Opportunities 3 Strategic partnership Strategic partnership with industry specialists – RP Global (Austria) 4 Small investment to Onl
Slide 67: Renewable Energy 5 Year Roadmap
Renewable Energy 5 year roadmap Establish renewable energy platform, Goal targeting 100MW+ in 4 medium size hydro power plants by 2020 Development 2 ongoing projects – 107MW, 4 HPPs Mestiachala Zoti Projects 1&2 1&2 Pipeline Estimated Capacity 100 MW 50MW 57MW Estimated Project Timeline2 2017-2018 2
Slide 68: Content: Teliani Valley
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 • Teliani Valley Georgian Macro Overview 73 Appendices 94 68
Slide 69: Teliani Valley: Targets and Priorities
Teliani Valley Teliani Valley | Targets & priorities (beverage business) Goal Become leading beverages producer and distributor in Caucasus Wine production Distribution Beer production Russian Federation Caspian Black Sea Sea Poti Georgia Batumi Tbilisi Rustavi Azerbaijan Business Turkey Armenia Bak
Slide 70: Teliani Valley: Exclusive Heineken Producer in Caucasus
Teliani Valley Exclusive Heineken producer in Caucasus Exclusive Heineken producer in Caucasus Strong management with proven Low consumption per capita Highly concentrated market track record compared to peers Domestic market segmentation Beer Consumption in Peer Countries 2015 (2016) (l/capita) 160
Slide 71: Teliani Valley: Investment, EBITDA Projection, Exit Options
Teliani Valley Exclusive Heineken producer in Caucasus Exclusive Heineken producer in Caucasus Investment EBITDA projection Exit options EBITDA Evolution, US$ mln (2018- 2022) Financials 12.0 24.1% 24.2% 30% 23.1% • Total investment – US$ 41.3mln, of 10.0 20.6% 22.4% 25% which US$ 21.7mln is equity
Slide 72: Content
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 Georgian Macro Overview 73 Appendices 94 72
Slide 73: Georgia at a Glance
Georgia at a glance General Facts • Area: 69,700 sq km • Population (2017): 3.7 mln • Life expectancy: 77 years • Official language: Georgian • Literacy: 100% • Capital: Tbilisi • Currency (code): Lari (GEL) Economy • Nominal GDP (Geostat) 2016: GEL 33.9 bln (US$14.3 bln) • Real GDP growth rate 2012
Slide 74: Georgia's Key Economic Drivers
Georgia’s key economic drivers Top performer globally in WB Doing Business over the past 12 years • Liberty Act (effective January 2014) ensures a credible fiscal and monetary framework: Liberal economic policy • Public expenditure/GDP capped at 30%; Fiscal deficit/GDP capped at 3%; Public debt/GDP
Slide 75: Growth Oriented Reforms
Growth oriented reforms Ease of Doing Business | 2017 (WB-IFC Doing Business Economic Freedom Index | 2017 (Heritage Foundation) Report) New Zealand 1 Estonia 6 USA 8 UK 12 Estonia 12 Georgia 13 Top 5 in Europe region out of 44 countries Georgia 16 up from 23rd in 2016 USA 17 Germany 17 Latvia 20 Ca
Slide 76: Government 4-Pillar of Reforms
Government 4-pillar of reforms Structural Reforms Promoting Transit & Tourism Hub • Corporate income tax reform • Plan to finish all spinal projects by 2020 – East- Tax Reform Roads West Highway, other supporting infrastructure • Enhancing easiness of tax compliance • Boosting stock exchange activit
Slide 77: Diversified Resilient Economy
Diversified resilient economy Gross domestic product Diversified nominal GDP structure, 2016 20 Real GDP growth was 5.0% in 1Q17 based on rapid estimates 16% Hotels & restaurants Industry 11.1% 12.6% 2.8% Other 17.1% 15 12% Financial interm. 10.7% 9.6% 9.4% 4.0% 7.2% 10 5.8% 6.2% 6.4% 8% Healthcare
Slide 78: Productivity Gains Main Engine of Growth
Productivity gains have been the main engine of growth since 2004 Overall contribution of capital, labour, and Total Factor Contributions of capital, labour, and TFP to growth during Productivity (TFP) to growth, 1999-2012 periods 10% Capital stock 8% 1.60% 6% 6.32% TFP growth 4% 3.86% 3.65% 3.65% 2
Slide 79: Further Job Creation is Achievable
Further job creation is achievable Unemployment rate down 0.4ppts y/y to 12.0% in 2015 Average monthly wages and income per household 1900 18% 1800 16% 500 1700 14% 400 1600 12% 1500 10% 300 1400 8% 200 1300 6% 1200 4% 100 1100 2% 0 1000 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 80: Low Public Debt
Low public debt Fiscal deficit Breakdown of public debt 0% -2% -0.3% -1.8% -4% -2.6% -2.8% -2.6% -3.2% External public debt -3.4% -3.6% -3.7% -4.1% portfolio -4.1% Multilateral -6% -4.8% weighted average Domestic 57% -6.5% External interest rate 1.9% -8% -6.7% 21% 79% -9.2% (Contractual maturity -10
Slide 81: Investing in Infrastructure and Spending Low on Social
Investing in infrastructure and spending low on social Revenues and expenditures, consolidated budget Current and capital expenditure 14,000 70% 100% Current Expenditures Capital Expenditures and net Lending 12,000 60% 80% 10,000 50% 79.8% 79.9% 81.6% 79.9% 75.9% 78.0% 75.9% 60% 72.4% 73.3% 8,000 40
Slide 82: Fiscal Performance
Fiscal Performance Consolidated budget tax revenues, GEL mn Consolidated budget tax revenues breakdown, 4M17 1,200 1,200 Property tax +12.3% Other taxes 2.3% 1.0% Customs duties 1,000 1,000 Corporate income 0.8% +18.7% tax 800 +26.3% 800 10.7% VAT +11.7% 39.8% 600 600 Excise tax 400 400 13.9% 200 20
Slide 83: Diversified Foreign Trade
Diversified foreign trade Imports of goods and services Exports of goods and services 12 8.0 7.2 7.0 10.0 7.0 10 9.1 9.3 1.1 0.9 6.2 6.2 8.7 6.0 1.7 8.4 6.0 0.4 0.3 8.0 1.6 5.2 7.5 1.4 0.9 8 1.7 1.3 1.7 5.0 0.7 5.9 1.2 6.1 4.0 3.1 3.1 2.6 2.5 6 5.2 4.0 3.7 2.5 1.1 3.2 3.2 0.5 0.9 0.3 4.4 1.0 2.5 0.2
Slide 84: Diversified Sources of Capital
Diversified sources of capital Strong foreign investor interest Tourist arrivals and revenues on the rise FDI stood at US$ 1,645mln, up 5.2% y/y in 2016 6.4mln visitors in 2016, up 7.6% y/y Net tourism revenues up 10.8% y/y to US$ 1,780 mln in 2016 2.5 25% 7,000 6,351 5,898 19.8% 6,000 5,392 5,516 2
Slide 85: Current Account Deficit Supported by FDI
Current account deficit supported by FDI Current account balance (% of nominal GDP) Tourism revenues on the rise Current transfers - steady source of 30% external funding 15% 16% 20% 8% 9% 8% 8.2% 9.1% 10.0% 11% 6% 6% 6.2% 5.1% 10% 3.9% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 86: Inflation Targeting Since 2009
Inflation targeting since 2009 Annual inflation Monthly inflation rate 9% 9% 3.5% 3.5% 8% 8% 3.0% 3.0% 7% 7% 5.4% 6% 2.5% 2.5% 6% 5% 5% 2.0% 2.0% 4% 4% 1.5% 1.5% 3% 3% 1.0% 1.0% 2% 2.9% 2% 0.5% 0.5% 1% 1% 0% 0% 0.0% 0.0% -1% -1% -0.5% -0.5% -2% -2% -1.0% -1.0% -3% -3% -1.5% -1.5% Sep-14 Nov-14 Sep-1
Slide 87: Monetary Policy and International Reserves
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Jan-14 Jan-14 Feb-14 Mar-14 Source: NBG Mar-14 Apr-14 Sources: NBG May-14 May-14 Jun-14 Jul-14 Jul-14 Aug-14 Sep-14 Sep-14 Oct-14 Nov-14 Nov-14 Dec-14 Jan-15 Jan-15 Feb-15 Mar-15 Mar-15 Apr-15 May-15 May-15 Jun-15 Jul-15 Aug-15 Jul-15 Sep
Slide 88: Floating Exchange Rate - Policy Priority
Floating exchange rate - Policy priority FX reserves Real effective exchange rate (REER) 135 135 3.5 1.4 1.6 130 130 1.3 1.4 1.3 1.3 1.2 1.2 1.3 125 125 3.0 1.2 1.2 1.4 1.1 120 120 2.5 1.0 2.9 1.0 1.2 0.9 2.8 2.8 2.7 115 115 2.5 1.0 2.0 2.3 2.8 110 110 2.1 0.8 1.5 105 105 0.6 1.4 1.5 100 100 1.0 0.4
Slide 89: Growing and Well Capitalized Banking Sector
Growing and well capitalized banking sector Summary • Prudent regulation ensuring financial stability − High level of liquidity requirements from NBG at 30% of liabilities, resulting in banking sector liquid assets to client deposits of 40% as of Dec 2016 • Resilient banking sector − Demonstrated st
Slide 90: Underpenetrated Retail Banking Sector Provides Room for Growth
Underpenetrated retail banking sector provides room for further growth Corporate loans to GDP Households loans to GDP 50% 45% 45% 40% 40% 25% 35% 35% 22% 30% 30% 15% 25% 25% 15% 15% 8% 10% 10% 20% 20% 6% 6% 15% 6% 15% 28% 6% 24% 26% 24% 10% 9% 8% 17% 17% 18% 18% 20% 22% 10% 21% 13% 17% 17% 18% 5% 10
Slide 91: Flexible FX Regime Shielded Reserves
Flexible FX regime shielded reserves and supported to macro stability Currency weakening vs. US$ Georgia used less reserves to support GEL 53.8% 53.9% 10% 2.7% 1.2% 10% 0% 0% 45.0% 40.3% 41.4% -10% -10% -4.5% 35.9% -20% -12.8% -20% 28.0% 28.4% -19.4% -19.5% -21.2% -30% -30% 23.5% -27.3% -40% -40% 16
Slide 92: Recent Trend: Tourist Arrivals, Exports, Remittances Up
Recent trend– Tourist arrivals/revenues, exports, and remittances up Tourist arrivals continue strong growth Remittances up from all major countries 1.0 40% 35% 140 60% 0.8 120 50% 30% 0.6 25% 100 40% 20% 80 0.4 23.5% 30% 15% 60 20% 0.2 10% 40 10% 5% 20 0.0 0% 0% 0 -5% -20 -10% -0.2 -10% -40 -20% -0
Slide 93: Content
CONTENT BGEO Group | Overview 4 Results Discussion | BGEO Group 14 Results Discussion | Banking Business 20 Results Discussion | Investment Business 47 Georgian Macro Overview 73 Appendices 94 93
Slide 94: BGEO Income Statement - Quarterly
BGEO Income Statement – Quarterly BGEO Consolidated Banking Business Investment Business Eliminations Change Change Change Change Change Change GEL thousands, unless otherwise noted 1Q17 1Q16 y-o-y 4Q16 q-o-q 1Q17 1Q16 y-o-y 4Q16 q-o-q 1Q17 1Q16 y-o-y 4Q16 q-o-q 1Q17 1Q16 4Q16 Banking interest incom
Slide 95: BGEO Balance Sheet - March 2017
BGEO Balance Sheet – 31 March 2017 BGEO Consolidated Banking Business Investment Business Eliminations STATEMENT OF FINANCIAL POSITION Mar-17 Mar-16 Change Dec-16 Change Mar-17 Mar-16 Change Dec-16 Change Mar-17 Mar-16 Change Dec-16 Change Mar-17 Mar-16 Dec-16 y-o-y q-o-q y-o-y q-o-q y-o-y q-o-q Cas
Slide 96: GHG Income Statement - Quarterly
GHG Income Statement – Quarterly Healthcare services Medical insurance Pharmacy Eliminations GHG GEL thousands; unless otherwise noted Change Change Change Change Change Change Change 1Q17 1Q16 4Q16 1Q17 1Q16 4Q16 1Q17 4Q16 1Q17 1Q16 4Q16 1Q17 1Q16 4Q16 y-o-y q-o-q y-o-y q-o-q q-o-q y-o-y q-o-q Reve
Slide 97: Belarusky Narodny Bank - Financial Data
BNB Belarusky Narodny Bank – Financial data INCOME STATEMENT, HIGHLIGHTS Change Change 1Q17 1Q16 y-o-y 4Q16 q-o-q GEL thousands, unless otherwise stated Net banking interest income 8,702 7,903 10.1% 8,043 8.2% Net fee and commission income 2,350 1,862 26.2% 1,993 17.9% Net banking foreign currency g
Slide 98: P&C Insurance (Aldagi)
P&C Insurance (Aldagi) INCOME STATEMENT HIGHLIGHTS Change Change 1Q17 1Q16 y-o-y 4Q16 q-o-q GEL thousands, unless otherwise stated Net banking interest income 767 725 5.8% 761 0.8% Net fee and commission income 99 100 -1.0% 128 -22.7% Net banking foreign currency gain (425) (47) NMF 809 NMF Net othe
Slide 99: Banking Business Key Ratios
Banking Business Key ratios BANKING BUSINESS KEY RATIOS 1Q17 1Q16 4Q16 Profitability ROAA, Annualised 3.2% 3.0% 2.9% ROAE, Annualised 23.5% 21.2% 20.1% RB ROAE 27.2% 24.3% 35.8% CIB ROAE 18.3% 17.6% 6.1% Net Interest Margin, Annualised 7.4% 7.5% 7.6% RB NIM 8.8% 9.2% 9.3% CIB NIM 3.4% 3.7% 3.6% Loan
Slide 100: Key Operating Data
Key operating data Selected Operating Data: 1Q17 1Q16 4Q16 Total Assets Per FTE, BOG Standalone 2,060 1,972 2,242 Number Of Active Branches, Of Which: 279 266 278 - Express Branches (including Metro) 130 114 128 - Bank of Georgia Branches 138 144 139 - Solo Lounges 11 8 11 Number Of ATMs 813 753 801
Slide 101: Analyst Coverage BGEO Group PLC
Analyst coverage BGEO Group PLC Share price consensus – GBP 35.69 Bank Target Price (GBP) Analyst report date BoAML 37.80 27-Mar-17 Citi 35.10 1-Dec-16 HSBC 36.00 28-Nov-16 Jefferies 40.00 20-Feb-17 KBW 32.30 20-Feb-17 Numis Securities 35.84 20-Feb-17 Peel Hunt 40.00 26-Apr-17 Renaissance Capital 33
Slide 102: Express: Emerging Retail Banking
Express Emerging retail banking – how Express works 1 2 130 Express Branches 1,315,489 Express Cards for Transport payments • Opening accounts and deposits • Issuing loans and credit cards • Credit card and loan repayments • Acts as payments card in metro, • Cash deposit into accounts buses and mini
Slide 103: Express: Capturing Emerging Mass Market Customers
Express Capturing emerging mass market customers 25,160 Express Pay terminals 28,822 -3% 25,928 8,608 53% Express branches 7,363 5,621 5,138 35% No. of transactions ‘000s ATMs 4,676 3,806 9,742 POS terminals 6,008 131% 1Q17 4,210 1Q16 1Q15 9,231 75% Express cards 7,148 5,269 1,719 Internet banking 1
Slide 104: Solo: A Fundamentally Different Approach to Premium Banking
Solo A fundamentally different approach to premium banking Through the recently launched Solo, we target to attract new clients (currently 21,657) to significantly increase market share in premium banking from c.13% at the beginning of 2015 SOLO Lounges New Solo offers: • Tailor made banking solutio
Slide 105: m2 Unmatched Track Record (1/2)
m2 Unmatched track record (1/2) Completed projects: All projects were completed on budget and on schedule 3 4 6 Project timeline 1 2 5 Start date: SEP’2010 MAY’2012 DEC’2013 JUL’2014 SEP’2014 123 apartments 525 apartments 221 apartments 270 apartments 238 apartments 295 apartments 1,672 apartments c
Slide 106: m2 Unmatched Track Record (2/2)
m2 Unmatched track record (2/2) Ongoing projects: All projects are within the schedule Project timeline 1 2 Start date: 3 4 NOV’2015 DEC’2015 JUN’2016 OCT’2016 819 apartments 19 apartments 302 apartments 82 apartments 152 rooms 1,222 apartments under construction with 45% pre-sales Project highlight
Slide 107: Notes to Key Ratios
Notes to key ratios 1 Return on average total assets (ROAA) equals Profit for the period divided by monthly average total assets for the same period; 2 Return on average total equity (ROAE) equals Profit for the period attributable to shareholders of BGEO divided by monthly average equity attributab
Slide 108: BGEO Group - Company Information
BGEO Group – Company information Registered Address 84 Brook Street London W1K 5EH United Kingdom www.bgeo.com Registered under number 7811410 in England and Wales Incorporation date: 14 October 2011 Stock Listing London Stock Exchange PLC’s Main Market for listed securities Ticker: “BGEO.LN” Contac