General Assembly

Transcription

1 General Assembly

2 Contents Macroeconomic environment Operation by segments Company s strategic restructuring Tourism Health Food Insurance Adris grupa 1

3 The second straight year with a growth provides the necessary optimism. Yet, recovery is considerably slower than the average of peer countries. Croatian and comparable countries economy since the start of recession Real GDP index, 2008= EU10* HR Source: Eurostat, HGK calculations, estimates for and 2017 * EU10: Bulgaria, Romania, Poland, Czech Republic, Slovakia, Lithuania, Estonia, Latvia, Hungary and Slovenia 2

4 Croatia is the biggest loser of the recession. Long-term forecasts show one of the lowest growth rates in the wider CEE region. Annual Growth Rate (CAGR*) of real GDP Realised CAGR* % Poland 3.1 Projection CAGR* % Romania 3.6 Romania 2.5 Slovakia 3.6 Slovakia 2.3 Bulgaria 3.6 Bulgaria 1.7 Serbia 3.4 Slovenia 0.9 Poland 3.1 Serbia 0.8 Hungary 2.2 Hungary 0.6 Croatia 2.1 Croatia -1.0 Slovenia 1.8 Average 1.4% Average 2.8% Source: IMF *CAGR = Compound Annual Growth Rate 3

5 The slow recovery is the result of declining competitiveness Competitiveness compared to surrounding countries The Global Competitiveness Report Rank *; EU 10 Estonia Czech Republic Lithuania Poland Latvia Bulgaria Slovenia Romania Slovakia Hungary Croatia Rank compared to the beginning of the crisis Rank vs 2008*; EU 10 Estonia Czech Republic Lithuania Poland Latvia Bulgaria Slovenia Romania Slovakia Hungary Croatia EU10 average 48 Source: The Global Competitiveness Report 2017, World Economic Forum *Includes 138 world economies, among which Switzerland is ranked as the most competitive 4

6 A low level of confidence in institutions necessary for creating a favourable investment environment Citizens trust in judiciary system Share of positive answers*, in % Croatian Army 90 Police 72 Tax Administration 50 State Attorney s Office 39 Courts 38 Building permit institutions Government Source: IPSOS *Per Likert s 5 degree scale only positive answers such as completely agree and mostly agree have been taken into consideration 5

7 Contents Macroeconomic environment Operation by segments Company s strategic restructuring Tourism Health Food Insurance Adris grupa 6

8 Adris today has three businesses that are sustainable in the long term* Tourism Health Food Insurance * A strong investment cycle worth almost HRK 4 billion in tourism, health food and insurance regionalisation supports the growth and development plans aimed at further increasing the value of the company 7

9 Over the past five years, Adris has invested more than HRK 4 billion 30 X been achieving an average annual net profit* of HRK 427 million 100 X * not including a positive impact of the transaction 8

10 Over the past five years, Maistra has boosted its operating revenues by 38 percent, while increasing its net profit by 2.4 times Maistra d.d. - business indicators Operating revenues In HRK mm +38% +5% Net profit In HRK mm 2.4 X +19%

11 Adris s Cromaris increased its sales revenues by almost eight times Cromaris d.d. - business indicators Sales revenues In HRK mm +8 X +8% Net profit In HRK mm +27 HRK mm +45%

12 Upon entering Croatia osiguranje s ownership structure, we have carried out a financial and organisational restructuring of the company. In the net profit was up by 54 percent compared to the year CO group - business indicators Net profit In HRK mm +54% +29% * Note: 2015 was the first full year under Adris grupa management * takeover

13 Thus, the increase in profit from new businesses completely offset the tobacco division operation Adris grupa - financial results Consolidated net profit in HRK mm +6% Average Portfolio Restructuring

14 In the period between 2012 and all of the above provided for... an average annual dividend growth (not including extraordinary dividends) of 21% average annual stock price increase 30 X ADRS-P-A 16% ADRS-R-A 100 X 24% 13

15 Contents Macroeconomic environment Operation by segments Company s strategic restructuring Tourism Health Food Insurance Adris grupa 14

16 Tourism is a growing business and the demand for Croatia has been increasing faster than the rest of Europe and the world Growth in tourist demand in * Growth in the number of tourist arrivals in % +5.1 pp pp +7.6 pp Croatia World Europe Southern Europe (Mediterranean) Source: Croatian Tourism Organisation, UNWTO * Records for the periods I-XII vs I-XII

17 With the investment of HRK 490 million in a new investment cycle was launched, worth more than HRK 2 billion by 2021 Continuing the portfolio premiumisation process Portfolio investment* Category 5* Hotel Camp Park Veštar HRK 553 mm HRK 78 mm Circle size representative of amount invested Hotel Lone HRK 25 mm Hotel Monte Mulini HRK 68 mm Maistra hotels Share of 4 and 5* capacity 4* Hotel Amarin HRK 300 mm Hotel Camp Eden Polari HRK 60 mm HRK 130 mm Family World Amarin HRK 150 mm Hotel Katarina HRK 210 mm 76% 95% 3* 17% Year of market entrance * additional investments in Vrsar by 2020 approximately HRK 450 million 16

18 An innovative hotel product by which Maistra continues creating a top hotel offer in order to establish its position in the growing premium segment Family Hotel Amarin Category: 4*, family hotel Soft opening 18 August The biggest investment in Istria's tourism this year, worth over HRK 300 million 280 accommodation units with the capacity of almost 1,000 guests Seven indoor and outdoor pools, wellness and spa zone covering 1,500 square metres, Six catering facilities and a number of children playgrounds and playrooms 17

19 Maistra s sales policy is oriented towards increasing the share of direct sales channels, which is today 36pp higher than it was in Consequently, average sale prices are on the rise as well. Sales channels management Maistra d.d. sales structure in % of accommodation revenues Indirect channel 66% 50% 42% 38% 33% 30% +36pp Direct channel 34% 50% 58% 62% 67% 70% Average accommodation price hotels (per room, in HRK) CAGR* % + 8% *CAGR ( Compound Annual Growth Rate) 18

20 In prices were up by 6 percent, bed nights by 3 percent Business indicators Number of bed nights In 000 Average bed night price In HRK +3% +3% +3% % % % 230 2,970 3,054 3,133 3,

21 which led to increase in revenues and operating profit, improving net profit by 28 percent. Financial business indicators Revenues and profitability of operation In HRK mm (mark-up %) +10% % 998 Net profit In HRK mm +19% Prihodi % % +3% EBIT (margin) 159 (20%) 202 (23%) 221 (23%) 239 (24%) *

22 The Hilton Dubrovnik proved to be a successful acquisition as part of the policy of investing in the top hotel segment Business indicators Grand hotel Imperial Occupied units In 000 Revenues and profitability of operation In HRK mm (mark-up %) +2% +4% +1% % % % EBIT (margin) 7.5 (13%) 13.0 (22%) 15.9 (26%) 17.3 (26%) Net profit Note: Acquisition completed in September

23 In the first four months the tourism business achieved 30 percent more bed nights, with a 3-percent increase in prices Business indicators, I-IV 2017 Number of bed nights In 000 Average bed night price HRK +30% % Note: Including the operation of the Grand Hotel Imperial Dubrovnik 22

24 A strong growth in booking compared to the previous year indicates a growing demand and continuation of positive trends Booking as of Units sold In 000 Gross sales revenues In HRK mm % % (82%) 485 (88%) Booking to date 442 (76%) 519 (84%) Booking to date * 2017** * 2017** *Booking as of in compared to I-XII results **Booking "as of in current year compared to the I-XII 2017 plan 23

25 Contents Macroeconomic environment Operation by segments Company s strategic restructuring Tourism Health Food Insurance Adris grupa 24

26 The growing global demand for fish is primarily being met by aquaculture Projection of global fish production Total production In mm tonnes 300 CAGR* % CAGR* +3% Aquaculture +7% Wild catch -0% Source: PwC Analysis, FAO *CAGR ( Compound Annual Growth Rate) 25

27 The proximity of the Italian market, Europe s biggest sea bream and sea bass market, is a major competitive advantage, with a further growth potential Sources of growth Proximity of Italian market and CE market Delivery in hours Export revenues % in revenue share, Cromaris >12 h h h N & E Europe In 000 tonnes Production Import Italy In 000 tonnes Production Import % 76% 84% Source: APROMAR, McKinsey 26

28 Cromaris is on a stable path towards achieving the production target of 10,000 tonnes by 2018 Growth trend sales In tonnes 10,025 Growth From 2008 to sales were increased by more than 6 times 6,889 Investment cycle focused on new capacities and vertical integration is a prerequisite for growth and higher production efficacy The economy of scale and brand development are the pillars of Cromaris sustainability and profitability 1,102 By 2018 the goal is to reach 10,000 tonnes We seek sources of growth in export, which accounts for three quarters of our sales. 27

29 In, positive trends in volume and price increase continued Physical business indicators Sales volume In tonnes Average prices HRK/kg +17% +5% +7% % % % ,629 6,573 6,889 7,

30 generating strong growth of revenues and net profit. Financial business indicators Operating revenues In HRK mm Net profit In HRK mm +26% +6% % x +45% x

31 Cromaris employs high-price policy despite the strong pressure by Turkish and Greek producers. Physical indicators are expected to improve by the end of the year. Physical business indicators, I-IV 2017 Sales volume In 000 tonnes Average prices HRK/kg -2% % 2,014 1,

32 Thanks to the improved cost efficiency, Cromaris continued to increase operating and net profits in the first four months of 2017 Financial business indicators I-IV 2017 Operating profit EBITDA in HRK mm Net profit In HRK mm +24% 3X

33 Contents Macroeconomic environment Operation by segments Company s strategic restructuring Tourism Health Food Insurance Adris grupa 32

34 Unconsolidated and poorly arranged Croatian market, both from owners and business viewpoint, offers significant growth potential, even in comparison with Central European markets EU market insurance in 2015 Gross premium %GDP x Europe 6.0 DE SI AT 4.0 HR PL CZ 3.5x 2.0 HU BG RO SK ,200 1,600 2,000 2,400 2,800 Source: Insurance Europe Premium per capita EUR 33

35 Financial and operational restructuring of the company successfully completed, laying ground for further growth The process of financial and operational restructuring of CO d.d. Restructuring costs In HRK mm Structure and number of employees in % 2,715 * Real-estate 484 2,379 Financial investment 158 Sales 23% 1,975 62% Severance % Other 127 Admin. 77% 38% 33% Total 926 Existing state 2021 Note: 2015 was the first full year under Adris grupa management * takeover

36 The negative trend was stopped and market share stabilised, while confirming the leading position as the most powerful insurance brand in Croatia... Croatia osiguranje brand CO+CZO market share in % Brand awareness % Croatian market Croatia osiguranje 89 Euroherc Allianz Jadransko * Source: HUO Grawe Generali Triglav Uniqa Source : GfK Market Research Note: 2015 was the first full year under Adris grupa management * takeover

37 ...consequently, premium was increased and efficiency improved at the level of the entire company... Physical business indicators of CO Group Gross premium charged in HRK mm Combined operating ratio** in %, +3% +2% +4% % % % ,868 2,968 3,018 3, * * Note: 2015 was the first full year under Adris grupa management * takeover ** for non-life insurance only; ration between total operating costs and premium earned 36

38 resulting with a strong growth, with HRK 175 million in net profit. Financial business indicators Net profit In HRK mm +54% +29% * Note: 2015 was the first full year under Adris grupa management * takeover

39 A number of strategic initiatives were launched to fortify the leading position in the Croatian market and sustainability of the company Continuation of restructuring process Net profit CO Group In HRK mm Recovery Investment Growth Total client orientation Growing regional player Restructuring (employee structure) 114 New products Operative efficiency 175 Complete business digitalisation Sustainable, profitable business 465 Process optimization (centralization) Note: planned net profit for has been achieved 38

40 Positive trends continued in the first four months A slight increase in premium, with a growth of operating efficiency... Physical business indicators CO Group, I-IV 2017 Gross premium charged in HRK mm +0.4% Combined operating ratio* in %, -1% ,299 1, * for non-life insurance only; ration between total operating costs and premium earned 39

41 resulting with a 61-percent increase in net profit year-on-year. Financial business indicators CO Group, I-IV 2017 Net profit In HRK mm +61%

42 Contents Macroeconomic environment Operation by segments Company s strategic restructuring Tourism Health Food Insurance Adris grupa 41

43 After having completed the restructuring process, Adris continues with successful operation Consolidated financial business indicators Adris grupa total revenues In HRK mm +16% -13% Adris grupa net profit in HRK mm +27% +22% 5,485 6,364 5, SBU Tobacco * (mil kn) 1,917 1, After minority interests (mm Hrk) SBU Tobacco * (mm Hrk) Note: Does not include capital gain from the sale of SBU Tobacco in 2015 * Consolidated revenues and net profit of SBU Tobacco and Retail 42

44 We are employing a reasonable dividend policy, stimulating for the shareholders. Over the past five years the regular dividend has been growing at an average rate of 21 percent a year, while an extraordinary dividend was paid out in Dividend policy dividends HRK/share Extraordinary dividend % Regular dividend

45 Despite a balanced dividend policy, the achieved dividend yield exceeded the five-year average in the Croatian market Dividend policy Dividend yield in % 4.7% 5.5% 3.9% ADRS-R-A ADRS-P-A CROBEX Source: ZSE; CROBEX - official index of Zagreb Stock Exchange 44

46 Share market price growing in and onwards Share price developments ADRS-P-A* In HRK ADRS-R-A* In HRK % % % % Source: ZSE Source: ZSE *Average annual share price for

47 The average annual return on shares since 1994 has been approximately 27 percent. Total average annual return per share TSR - Total Shareholders Return* (%) Adris P-A +26.6% Adris R-A +27.4% *TSR ( Total Shareholder Return includes the growth of the share price and dividend in the given period (1994 ). 46

48 Over the next four years Adris will invest HRK 4 billion in growth and development of its operations, mostly from its own assets Investment cycle Investments structure In HRK mm 4,012 1,530 2, ,652 Tourism* Health Food Other Total * HRK 450 million in investments in Vrsar, not part of the strategic plan. Not including investments in Split and Zagreb 47

49 Adris today has sustainable and growing businesses, with a vision of further growth, development and value creation for the shareholders Sustainable and growing operations Fully restructured portfolio; Adris has opted for operations with growth and demand rates that are stable in the long run; Operations are not highly concentrated and globalised; Results so far results in all three operations show a growth trend of key business indicators volumes, revenues and profits; Further increase in shareholder value Growth and development concept of our operations supported by investments worth HRK 1 billion annually over the next four years; Reasonable dividend policy, stimulating enough for shareholders, while providing for further growth and development of the company. 48

50 General Assembly proposal decisions Profit allocation: (1) It is established that the total profit after taxes for the year amounts to HRK 235,724, (2) The total profit recorded in the year, after taxes, in the amount of HRK 235,724,920.36, shall be allocated to the Company s Statutory Reserves. Retained profit: (1) It is established that, based on the completed process of acquiring the company Tvornica duhana Zagreb d.d., Rovinj, Obala Vladimira Nazora 1, OIB: in, by Adris grupa d.d. and the change of accounting standards, the total retained profit amounts to HRK 378,468, (2) The total retained profit from item I herein, in the amount of HRK 378,468,078.51, shall be allocated to the Company s Statutory Reserves. 49

51 General Assembly proposal decisions Dividend: (1) From the statutory reserves, generated and accumulated by the Company s operation until the year 2000 and from 2005 to 2012, the amount of HRK 244,000, shall be set aside to non-allocated retained profit. (2) From the Company s non-allocated retained profit, HRK 278,800, shall be allocated to dividends, in the amount of HRK per share. (3) The dividend set forth in item II herein shall be paid out on 21 July 2017 to the accounts of the shareholders based on the status in the Central Clearing and Depository Company as of 30 June (4) The dividend referring to own shares shall be retained in Company s non-allocated profit. (5) This Decision shall come into force after it is adopted by the Company s General Assembly 50