General Assembly June 27 th, 2018

Transcription

1 General Assembly June 27 th, 2018

2 Contents Macroeconomic Environment Business Units Tourism Health Food Insurance Adris grupa 1

3 Inefficiency of the labor market and of the institutions as well as low innovation capacity are the causes of Croatia s limited economy growth Drop in competitiveness compared to the surrounding countries Global Competitiveness Report rank; CEE region Change in Competitiveness Level rank vs 2008* 1. Switzerland 1. Switzerland Bulgaria Slovenia Slovakia 53. Poland 61. Croatia 62. Hungary 68. Romania 76. Bulgaria Poland Slovenia Bulgaria Slovakia Hungary Romania Croatia Serbia Poland Serbia Hungary Romania Slovenia Slovakia Serbia Croatia -13 Source: World Economic Forum, Global Competitiveness Report * 137 countries included; Switzerland is the world s most competitive economy 2

4 Croatia recorded GDP growth for the third consecutive year and the forecasts indicate that the positive trend will continue. Return to pre-crisis levels is expected in Croatian economy since the beginning of the crisis Real GDP index, 2008= % +2.3% +2.9% Source: IMF; World Economic Outlook Databases, October, Croatian Bureau of Statistics, Raiffeisen Research No. 68, January

5 In Croatia, too few people are employed Low Employment Rate Employment Rate of the Age Group in % Croatia* 52 Top 10 countries in Europe 75 Slovakia 91 Source: M. Škare, column Opinion Maker, Lider 4

6 How to manage a company or conduct business in Croatia today, under the condition of radical egalitarianism? Business Climate in Croatia Survey Results in % Positive 30% Neutral 32% 62% Negative 38% Attitude Towards Croatian Entrepreneurs Entrepreneurs are a key to solving the crisis Source: Croatian Employers Association results of measuring business climate in 2015., N=1,000 5

7 And what have we done in such an environment? 6

8 What is Adris? Adris is a management and investment company which emphasises social responsibility. How does Adris choose its business activities? What is its business policy? 7

9 Continuation of strategic moves at the Group level Business system transformation of Adris grupa

10 By acquiring the majority stake in HUP, Adris has expanded its tourism operations to Zagreb and Dubrovnik - the tourist destinations that grow faster than the Croatian average Adris manages hotel facilities in three premium tourism destinations in Croatia Annual Growth Rate Bed nights 2013 Zagreb Zagreb Rovinj 6.4% 16.1% economic and political center of Croatia; the fastest growing Croatian tourist destination recording already two million bed nights; lower seasonality than coastal destinations; Dubrovnik Dubrovnik 13.1% Republic of Croatia 8.3% a prestigious Croatian tourist destination with 3.89 million bed nights in ; along with Rovinj (3.82 million), Dubrovnik has the highest bed night occupancy in Croatia; growing tourist destination; Source: Croatian Bureau of Statistics, Istria Tourist Board 9

11 Improved financial strength of the tourism segment brings the Group s financial stability into balance on two pillars Pillars of the Group s financial stability Net profit by segments in in millions of HRK Insurance 254 Tourism

12 Contents Macroeconomic Environment Business Units Tourism Health Food Insurance Adris grupa 11

13 World tourism recorded high growth rates in, Croatian tourism grew two times faster, Tourism demand growth in Tourist arrivals growth in % World pp Europe pp Southern Europe (Mediterranean) pp Croatia 13.8 Source: Croatian Tourist Board, UNWTO * Data for I-XII vs I-XII

14 the continued increase in bed occupancy rate is expected in the upcoming years Continued growth of tourism demand in Croatia Tourism Flow in millions of bed nights Estimated Growth of Tourism Flow in millions of bed nights CAGR* +4% CAGR* +8% Source: Croatian Tourism Board, Raiffeisen Research No. 68, January 2018 *CAGR = Compound Annual Growth Rate 13

15 ... where revenues will rise at a faster rate than bed night occupancy, due to investments in the quality of tourism offer. Growth of tourism revenues Tourism Revenues (foreign expenditure) in billions of Euros CAGR* +6.6% Revenues in Foreign Markets, Maistra Group share in revenue**, % 94% 95% 96% Source: Croatian Tourism Board, Raiffeisen Research No. 68, January 2018 *CAGR Compound Annual Growth Rate ** share of revenues from foreign visitors in total revenues from accommodation and F/B 14

16 Investments are in line with defined plans Key investments in Hotel Park Category: 5* Total project value: HRK 650 million Externally financed through HBOR loan for the most part HRK 223 million invested in HRK 427 million to be invested in 2018 Hotel Eden HRK 66 million invested in the improvement of accommodation quality Campsites Polari, Veštar and Valkanela the hotel opened in early April as planned HRK 187 million invested in the improvement of accommodation quality and the development of the infrastructure Grand Hotel Imperial Dubrovnik Reconstruction of accommodation units worth HRK 69 HRK million started in late. The hotel was re-opened in the middle of April 2018 Other projects Maintaining quality of other products worth HRK 50 million 15

17 Investments in product quality and destination development plus efficient company management have generated strong growth of all indicators Season extension and average price growth - hotels Capacity Structure share of 4* & 5* capacities +28 pp +8 pp Full Occupancy Days days +49 days +6 days Average Unit Price in HRK +52% % 1,

18 Maistra achieved a 10 % growth in bed nights in Bed nights, Maistra grupa in % +10% +4% 3,118 3,199 3,515 3,

19 with a strong rise in average prices for all product groups Average accommodation price* by segments +5% +2% +6% % +2% +5% % +6% +8% * per bed night 18

20 which led to a double-digit growth in revenues, operating profit and net profit. Financial Indicators Operating Revenues and Return on Assets in millions of HRK (% margin) +7% +13% 1,220 Revenues 1,144 +9% 1, Net profit in millions of HRK +30% +14% +11% EBIT (margin) 164 (18%) 181 (18%) 229 (20%) 264 (22%)

21 Through the first five months of 2018, the tourism segment generated a 35 % growth in bed nights and a 10 % rise in average accommodation price Performance Indicators, I-V 2018 Bed nights in % Average Accommodation Price in HRK %

22 which resulted in an increase in operating and net profits. Financial Indicators: I-V 2018 Operating Profit EBIT in millions of HRK Net Profit in millions of HRK % +4%

23 The company is expecting further growth in demand by the end of the year and the continuation of positive trends Booking status June 26 th, 2018 Trends in demand Further growth in demand in comparison with last year, based on: improved quality of tourism products perception of Croatia as a safe destination Croatia as a destination for visitors travelling by cars and other road vehicles The current booking status shows increased revenue from hotel operations relative to the previous year. Revenues - Hotels in millions of HRK % Revenues Resorts in millions of HRK % 22

24 Contents Macroeconomic Environment Business Units Tourism Health Food Insurance Adris grupa 23

25 In the last six years, consumer prices of fish and seafood grew twice as fast as prices of other food products Growth in consumer prices of food, meat and fish in EU Consumer Price movements rise in % 2016/2011 Meat 8% 2 X Food 9% Fish and seafood 16% Source: EUMOFA, The EU Fish Market, Edition; 24

26 Growing trend in consumption in Italy that is the largest and most developed European market of sea bass and sea bream Sea bream and sea bass consumption growth in Italy Total sea bream consumption in millions of EUR Total sea bass consumption in millions of EUR CAGR** +8% CAGR** +6% Source: EUMOFA, The EU Fish Market, edition.; EUROSTAT *Average annual sea bream and sea bass consumption growth in EU is around 6%;(EUMOFA, The EU Fish Market, edition) **CAGR - Compound Annual Growth Rate 25

27 where quality and origin of products are the key elements of distinctiveness, which gives Cromaris products Conformity of Cromaris portfolio with consumer preferences in the market Key Criteria for Selection of Fish Italian market Quality (freshness; appearance) 64% Origin 55% Price 47% Brand and quality labels 26% Simplicity of preparation 18% Source: EUMOFA 26

28 a competitive advantage and growth potential, thanks to their proximity and fish farming in the protected areas of the Adriatic Sea. Proximity of Italian and CE Markets delivery speed in hours Export Revenues share in Cromaris revenue, % >12 h h h 59% 77% 33% 83% 36% Other countries 23 37% 44% 48% Italy Source: EUMOFA, The EU Fish Market, Edition 27

29 Product quality and continued investments in brand development have positioned Cromaris products as premium products in Italy their key export market Average price of fresh fish in the Italian market, XII- Sea Bass Price /kg Sea Bream Price /kg +25% +31% Reference group* Cromaris Reference group* Cromaris Source: Kontali Analyse; Price-benchmarking Report for Sea bass and Sea bream in the Mediterranean, December * Reference group average price on Italian market in (Cromaris excluded) 28

30 Cromaris has significantly increased its share in revenues from sales of value-added products which are the key element of distinctiveness relative to the competition Processing the strategic advantage of Cromaris Value-added products Value-added products share in total sales revenue, % 43% 37% 30% 21% 8% Source: Cromaris, internal data *CAGR - Compound Annual Growth Rate 29

31 Cromaris is steadily advancing in the direction of economies of scale Growth of Cromaris Sales Volume Sales in in tonnes Growth Sales increased more than sixfold in the period from 2008 to ; 7,334 Investment cycle that is focused on new capacities and vertical integration (hatchery, processing, shipping center) ensures higher production efficiency; 3,773 Economies of scale and development of brand and portfolio of high value -added products are the basis of Cromaris sustainability and profitability; 1,102 A number of projects are underway with the goal to strengthen the management capacities and to optimize the production processes

32 In the growth trends continued, both in volumes and prices, Volume Indicators Sales Volumes in tonnes Average Prices HRK/kg +5% +6% +14% % % ,573 6,889 7,334 8,

33 generating a strong rise in revenues and net profit. Financial Indicators Operating Revenues in millions of HRK Net Profit in millions of HRK +13% +6% +8% +24% +76% %

34 Through the first five months of 2018, a rise in volume indicators have continued Volume Indicators I-V 2018 Sales Volume in 000 tonnes +13% Average Prices HRK/kg % 2,626 2,

35 and operating and net profits have increased. Financial Indicators, I-V 2018 Operating Profit EBIT in millions of HRK Net profit in millions of HRK +36% +134%

36 Contents Macroeconomic Environment Business Units Tourism Health Food Insurance Adris grupa 35

37 There is a significant potential for growth in the insurance industry driven by trends that increase the need for insurance Trends and Growth Potential of the Insurance Industry Key drivers of demand growth Estimated growth potential by types of insurance EU, % New technologies and risks Stricter regulations and better client awareness Non- life insurance* Covered 45% Growth potential 55% Middle class wealth growth Life insurance** 70% 30% Liberalization and lesser government influence Growth in healthcare expenses Health Insurance 33% 67% Source: OECD, Munich Re, World Health Organization * Covered losses versus total losses caused by natural disasters in 2015 ** Public pension (1st pillar) and compulsory private pension (2nd pillar) for low- income men in Weighted average (based on GDP) for Germany, the Netherlands, Italy, United Kingdom, France, Belgium, Spain and Switzerland *** The share of direct healthcare payments that households do not pay fromf their budgets (eg for insurance and medicines) relative to total private health care allocations 36

38 There is a positive correlation between the evolution of the living standards and the gross premium per capita EU Insurance Markets in 2016 Gross premium % GDP 10 9 Middle Europe FR IT Western Europe 8 7 PO BG RO HR SK PL HU LA SI CZ MT ES BE DE AT IR GDP per capita in 000 EUR Source: Insurance Europe 37

39 After the end of the price war period in the Croatian market, and a loss of almost a third of the car insurance market, the situation has finally stabilized, having an impact Effect of car-insurance segment liberalization Gross Written Premium for Car Insurance in Croatia in millions of HRK 2,950 2,357-32% 2,009 1,951 2, Source: Çroatian Bureau of Insurance reports. The data also include the gross written premium of insurance companies of the Croatian Bureau of Insurance based in the EU Member States and billed in the Republic of Croatia. 38

40 on the entire insurance market that shows long-term positive trends. In the forthcoming period, a growth of the market is expected in correlation with GDP growth. Development of Croatian Insurance Market and GDP ( ) Growth of total GWP in Croatia and of GDP relative to 2012 index, 2012= GDP Insurance Source: GDP: Croatian Bureau of Statistics, Raiffeisen Research no. 67, October ; Premium: Internal calculations by CO 39

41 Croatia osiguranje is by far the strongest and most trusted brand and insurance company in Croatia. Its leading position is a result of that trust. The 5 most trustworthy insurance companies, according to clients opinion Trust Index* % of Croatian market sample; n=6,587 Market Share % of market share in Croatia osiguranje % Allianz % Euroherc % Generali % Uniqa % Source: Valicon, All insurance/results for ; Overview of insurance market for private individuals *The results are ranked according to the declining gap between trust and distrust in the insurance company To what extent do you trust insurance companies? Which insurance companies do you trust? // Which insurers, would you say, you DO NOT TRUST? 40

42 Croatia osiguranje has stabilized its market share in Croatia after a longtime downturn. Consequently, a premium at the company level has grown Volume Indicators Market Share - CO % 38.4 * Gross Written Premium - CO Grupa in millions of HRK +4% +4% +2% 3,257 3,140 2,968 3, * Acquisition on April 30th, 2014; 2015 was the first full year under the management of Adris Group 41

43 which, together with the stabilization of the combined ratio below 100 percent, has driven a growth in net profit to HRK 254 million. Financial Indicators Combined Ratio, from operations* %, CO Grupa Net profit in millions of HRK -7 pp -0.1 pp pp +20% +45% +53% *Exclusively for non-life insurance 42

44 New trends and further market segmentation are a key parameter in creation of the basic market levers... Managing the basic strategic levers Market inputs Key trends Demographic changes Technology and Innovation Shift in customer behavior Economic environment Usage based insurances Internet of things Players from other sectors Segmentation 5 segments Different needs Various sales channels Potential of a new premium Key strategic levers Modern and competitive product portfolio Customer journey Client s journey through CO services Digitalization Additional services offered along with CO standard Development of new products in line with trends and future market demands Changing market environment by the introduction of new products - innovation Changing client interaction view, from sector view to clients view Managing the overall experience that the client has in interaction with the CO Total digitalization both internally and externally Opening of digital (direct) sales channel Entry of CO into business areas that are complementary to insurance business - care for the elderly, polyclinics and dental health 43

45 in accordance with which a series of activities focused on new additions to the existing model, as well as on completely new products, channels and services, has been launched. Managing the key strategic levers Improvements to the existing business model Distance from the current CO business model Additions to existing business model Development of a new operating model Modern and competitive product portfolio Customer journey Client s journey through CO services Digitalization Additional services offered along with the CO standard Premium AC: AK and CZO new architecture Telematics accidents SME Retail CO Assistency Cyber SPI All Risk Assets Long term care/ Personalization of car Nursing homes insurance Introducing client journey New bundle products tracking, depending on a type of interaction Development of Car and CO brand web Health applications Introducing direct (other) My Croatia upgrade Telemetrics CO sales app Smart homes brand Smart agriculture Development of polyclinics Dental Eldery care homes 44

46 Continuation of positive trends through the first five months of 2018, 8% percent growth of GWP in comparison with last year Operations, I-V 2018 Gross written premium in millions of HRK, CO grupa +8% 1,584 1,

47 and a growth of net profit that has more than doubled. Operations, I-V 2018 Net profit in millions of HRK, CO grupa +136%

48 Contents Macroeconomic Environment Business Units Tourism Health Food Insurance Adris grupa 47

49 In, Adris grupa achieved a ten percent increase in sales revenues Total Sales Revenues, Adris grupa Sales Revenues in millions of HRK 3,859 +3% 3, % 4,373 Tobacco SBU * in millions of HRK 2015* 1, *Not including consolidated revenues from sale of Tobacco SBU and the retail trade in the amount of HRK million 48

50 In the last nine years, Adris invested more than five and a half billion HRK in development of new businesses, mostly in insurance and tourism segments Investments in development of new Adris businesses Investments* in the period from 2009 to in millions of HRK 415 2, ,679 2,093 Tourism Health food Insurance Other Adris grupa **Not including HRK 642 million investment in tobacco business, and HRK 200 million of tourism unit restructuring costs 49

51 All three business segments generated a double digit net profit growth in. A total amount of net profits of all of our three business segments grew by 33%. Similar trends are expected in Financial performance of Adris operating companies Net profit of the operating companies in millions of HRK +43% 629 CAGR*, 18/ HUP % Tourism +12% Cromaris +48% CO +32% Consolidated net profit In millions of HRK After minority interests In millions of HRK Reservation AGK (%) * CAGR - Compound Annual Growth Rate 50

52 Unlike the Croatian market average, the debt ratio shows high investment potential of Adris grupa Indebtedness Investment Potential Debt ratio net debt/ebitda* 4X sustainability level Adris grupa -2.3 CROBEX Median 2.6 Source: ZSE; CROBEX - official index of Zagreb Stock Exchange * Time required to cover total net debt from operating business (difference between financial debt and liquid assets); Negative value of the indicator means that the company is not indebted, ie there are available funds for investment, growth and development 51

53 which allows for continuation of investments in growth and development of its businesses Investment Cycle until 2022 Investment Structure in HRK mm (share in total investments,%) 228 (10%) 3,918 (100%) 3, (15%) Acquisition HUP Zagreb d.d. 1,450 Capital investments 1,881 (75%) Tourism Health food Insurance Adris grupa 52

54 and the Company s growing dividend policy. Progressive dividend policy Dividend per Share* in HRK/share Dividend from profit in HRK mm *dividends are paid out of the profit of the previous year 53

55 All business segments recorded a growth of key business indicators in, and business plans show a continuation of positive trends in 2018 and the years to follow Growth in all businesses in double digit growth of net profit in all business segments total amount of net profits generated in all of our three business segments increased by 33%; Strategic shifts at the Group level our investment in tourism acquisition of HUP d.d. Zagreb is the largest and most significant investment in Croatian tourism Continued growth of all businesses and dividend further growth in all business segments is supported by a strong investment cycle worth HRK 3.9 billion; growing dividend; 54