IS Investment 1H15 Results & Performance Presentation

Investor Relations

PERFORMANCE & FINANCIAL RESULTS – 1H15August 4, 2015

Investor Relations

Performance & Financial Results – 1H15

1

About Us

Market Performance

Financial Results

Investor Relations

IS Private Equity: (Share: 29.1%) (Ticker: ISGSY:TI)One of Turkey’s largest Private Equity company and listed since 2004; 26.5% IRR (Internal Rate of Return) on USD basis from 11 exits

IS Investment Trust (Share: 28.9%) (Ticker: ISYAT:TI)Turkey’s leading Investment Trust; listed since 1996, represents more than 50% of the sector with its TL 232mn portfolio

IS Asset Management: (Share: 70.0%)Turkey’s leading portfolio management company managing mainly IS Group funds, represents more than 20% of the fund market with its TL19.7bn AuM

Maxis Investments: (Share: 100.0%)London headquartered and capital markets licensed subsidiary

IS Investments Gulf: (Share: 100.0%)We are liquidating our fully owned subsidiary based in Dubai

Efes NPL Asset Management: (Share: 74.0%)Aims to manage mainly banks’ NPLs

* Current structure

2About Us

Shareholder Structure Business Lines

Credit Rating

‘AA+(tur)’ by Fitch Ratings - The first and the only

investment house that has (AA+) credit rating in

Turkey

Corporate Governance Rating

‘AAA (Trk)/Distinctive’ by JCR Eurasia - The first

and the only investment house that has a corporate

governance rating in Turkey

Subsidiaries*

• Brokerage & Trading

• Investment Advisory

• Asset Management

• Corporate Finance

• Research

IS Bank & IS Bank Group

Companies71%

63%

Free Float29%

37%

International Shareholders ‘Share

Investor Relations


3

About Us

Market Performance

Financial Results

Investor Relations

819

1,112

0

200

400

600

800

1,000

1,200

'14/6 '15/6

Billions

Trading Volume (TL bn)

Market Performance Equities 4

The market IS Investment

Source: Borsa Istanbul, Equity Market Data Market Transactions by Members

IS Investment 7.3%

Broker 1 7.2%

Broker 2 7.1%

Broker 3 6.1%

Broker 4 5.8%

#1

63.0

81.4

7.7%7.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

0

10

20

30

40

50

60

70

80

90

100

'14/6 '15/6

Billions

Trading Volume (TL bn) Market Share

80

90

100

110

120

130

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

BIST 100 Benchmark Interest Rate USDTRY

Despite stiff competition in the market, we managed to

increase our trading volume by 29% and kept our leading

position at 7.3% market share

Despite better macro-economic expectations in January,

volatility -driven by concerns on currency fluctuation

coupled with the general election- was the main reason

for 36% higher trading volume in the first half

Investor Relations

411

558

0

100

200

300

400

500

600

'14/6 '15/6

Billions

Trading Volume (TL bn) Foreign Investors’ Share

Market Performance Derivatives 5


Source: Borsa Istanbul, Derivatives Market Data,Market Transactions by Members

Broker 1 13.67%

IS Investment 8.79%

Broker 2 8.76%

Broker 3 6.68%

Broker 4 5.42%

#2

Although our trading volume rose by 7% Y-o-Y, we

ranked second at derivatives market

Foreign investor based transactions increased to 28.5%

from 23.8% while the trading volume, mainly driven by

the index futures, grew 36% annually

45.9 49.1

11.2%

8.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

10

20

30

40

50

60

'14/6 '15/6

Billions


350

400

450

500

550

600

650

Jan Feb Mar Apr May Jun

Thousands

End of Day Open Interests – Index and currency futures

2015

2014

23.8%

28.5%

Investor Relations

402.9466.2

12.5%

6.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

100

200

300

400

500

600

'14/6 '15/6

Billions


16%

Market Performance FX Margin Trading 6


Source: Turkish Capital Markets Association,Brokerage Firms’ Comparative Data

Broker 1 11.6%

Broker 2 8.8%

Broker 3 8.2%

Broker 4 7.6%

IS Investment 6.2%#5

3,232

7,541

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

'14/6 '15/6

Billions

Trading Volume (TL bn)

FX margin trading, which had become one of our sustainable business-lines, continued to diversify

our revenues by 16% higher trading volume on annual basis

Investor Relations

Market Performance Primary market 7

Debt securities issuances IS Investment*

Source: Borsa Istanbul, IPO Data

We intermediated the issuance of 72 debt securities in total

with size of TL8.2bn supported by private placements and

continued to lead the market by 22.4%

The total size of the issuance of debt securities reached

TL 36.5bn rising by 10% with respect to 1H14, private

placements took larger portion and increased by 61%

22.018.5

11.2 18.0

233

308

50

100

150

200

250

300

350

0

5

10

15

20

25

30

35

40

'14/6 '15/6

Public Offerings (TL bn) Private Placements (TL bn)# Total Issuances

6.9

4.6

0.9

3.6

45

72

0

10

20

30

40

50

60

70

80

0

1

2

3

4

5

6

7

8

9

'14/6 '15/6

Public Offerings (TL bn) Private Placements (TL bn)# Total Issuances

23.4% 22.4%

Market Share

* IS Investment borrowed TL 428mn from the market in 19 issues

Investor Relations

Market Performance 8

M&A deals closed in 1H15 - IS Investment Equity margin trading - IS Investment

259

306

0

50

100

150

200

250

300

350

'14/6 '15/6

Millions

Loan size (TL mn)

Source: IS Investment

Despite the volatile environment, fully collateralized

equity margin trading business kept growing by

increasing the loan size 18% when compared to the same

period of last year

Four deals were closed in the first half of the year despite

the grim macro-economic outlook

Target Firm IndustryOur role as an

advisor

İsmar Marketleri Food Retail Sell-side

Zey-tur San Food Sell-side

Yeşil Küre Food Buy-side

Evciler Pharmaceutical sell-side

Investor Relations

Market Performance Asset under Management 9


Source: CMB & IS Asset Management

AuM size reached TL 19.8 billion surging by 25% Y-o-Y,

while pension funds, which are more important to our

portfolio management commissions, grew by 28% Y-o-Y

Pension funds in Turkey continuously growing; the size

reached TL 40.3bn rising by 32% when compared to the

same period of the last year

30.440.3

31.0

38.2

0

10

20

30

40

50

60

70

80

90

'14/6 '15/6

Mutual Funds (TL bn)

Pension Funds (TL bn)

2.5 3.4

5.8

7.4

7.6

9.0

0

5

10

15

20

25

'14/6 '15/6

Mutual Funds (TL bn)

Pension Funds (TL bn)

Other Funds* (TL bn)

* Other funds includes portfolios of private asset management, alternative investment products management, Turkishfund (SICAV) and portfolio of IS Investment Trust

23.4%

18.4%

Market Shares

Investor Relations


10

About Us

Market Performance

Financial Results

Investor Relations

Financial Results Consolidated 11

IS Investment - Consolidated(TL000)

1H14 1H15 YoY (%)

Total Assets 5,124,882 5,435,984 6

Shareholders' Equity 526,358 538,864 2

Net Profit 32,138 23,213 (28)

Despite the unfavourable politic and economic outlook, we generated TL23.2mn net income;

still in line with the year-end expectations

1,2411,569

2,539 2,6863,063

4,166

4,935

5,355 5,436

244 268 329 375 400 460 518 557 539

38.4 45.967.5 64.2 52.4 68.7

70.8 62.9 54.0

19.4%17.9%

22.5%

18.2%

13.5%

15.9% 14.5%

11.7%

10.1%

0%

4%

8%

12%

16%

20%

24%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

'07 '08 '09 '10 '11 '12 '13 '14 '15/6

ROAETL Million

Total Assets (TL mn) Shareholders' Equity (TL mn)

Net Income Trailing - last 4 quarters (TL mn) ROE

Investor Relations

5

38

2

46

10

68

18

64

8

52

32

69

11

71

4

63

12

?

7 10

2411

13

14

10 28 11

0

10

20

30

40

50

60

70

80

TL Million

Financial Results Consolidated Net Profit 12

Poor performance of the investment trust and the private equity activities moved down the bottom-line while

the revenues from our core business lines increased by 33% with respect to the same period of the last year

‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15

Q1

Full Year

Q2

Investor Relations

Net Profit (TL) 1H14 1H15 YoY (%)

IS Investment Only* 32,436,929 34,172,290 5

IS Investment Trust 4,828,727 751,658 (84)

IS Private Equity** 1,573,266 (1,762,323) n.a.

IS Asset Management 3,557,261 4,279,113 20

Efes NPL Asset Management 6,440,928 4,227,166 (34)

Elimination Adjustments*** (16,698,770) (18,454,845) n.a.

Consolidated Net Profit 32,138,341 23,213,059 (28)

Financial Results Consolidation Effect 13

* Includes Maxis Investments and IS Investments Gulf

** Profit attributable to equity holders of the company reallocated above table, which may differ from the disclosed financial statements

*** Dividend and revenue elimination with subsidiaries, which is also reallocated and may differ from the disclosed financial statements

Consolidated Net Profit = [IS Investment Solo Net Profit + Contributions from Subsidiaries] – Elimination Adjustments

Contributions from Subsidiaries

Elimination Adjustments

IS Investment Solo Net Profit

Consolidated Net Profit

Our non-consolidated net income increased by 5% Y-o-Y thanks mainly to the brokerage, corporate finance and asset

management business lines

IS Asset Management’s contribution was 20% higher as expected; we believe to see the same tendency in the second half

Negative contribution of IS Private Equity merely caused by its portfolio companies’ weak results

Efes NPL Management performed well in spite of the negative macro-economic outlook

Investor Relations

Interest and Trading Income68%Commission

Income32%

Interest and Trading Income60%

Commission Income40%

Financial Results Breakdown of Operating Revenues 14

Breakdown of Revenues (TL 000)

1H14 1H15 YoY (%)

Interest and Trading Income 126,196 119,571 (5)

Commission Revenues* 59,561 79,493 33

Total Operating Revenues 185,757 199,064 7

Operating Revenues – 1H14 Operating Revenues – 1H15

TL 185.8mn TL 199.1mn

Interest & trading income adversely affected by the lower equity index level and higher bond yields, while the commission

revenues soared up by 33%

* Client based FX margin trading revenues are added to the commission revenues

Investor Relations

Brokerage 67%

Corporate Finance

10%

Asset Management

21%

Other Commissions

2%

Brokerage 64%

Corporate Finance

13%

Asset Management

22%

Other Commissions

1%

Financial Results Breakdown of Commissions 15

Commission Revenues(TL 000)

1H14 1H15 YoY (%)

Brokerage* 39,852 51,100 28

Corporate Finance 5,774 9,980 73

Asset Management 12,572 17,367 38

Other Commissions 1,362 1,045 (23)

Total 59,561 79,492 33

TL 59.6mn TL 79.5mn

Commission Revenues – 1H14 Commission Revenues – 1H15

38% increase of asset management fees are noteworthy with respect to the previous periods, while brokerage

and corporate finance revenues soared up by 28% and 73% Y-o-Y respectively

* FX margin trading revenues are added to the brokerage income

Investor Relations

Other Exp.1%

Marketing Exp.25%

Adm. Exp.74%

Other Exp.1%

Marketing Exp.25%

Adm. Exp.74%

Financial Results Breakdown of Operating Expenses 16

Operating Expenses(TL 000)

1H14 1H15 YoY (%)

Marketing, Sales and Distribution Expenses 33,610 35,754 6

General Administrative Expenses 97,871 108,219 11

Other Operating Expenses 1,596 1,914 20

Total 133,077 145,887 10

TL 133.1mn TL 145.9mn

Operating Expenses – 1H14 Operating Expenses – 1H15

OPEX increased by 10% Y-o-Y due to the consolidation effect; but in contrast with that, our non-consolidated OPEX

increased by only 6% Y-o-Y thanks to our strict cost management policy

Investor Relations

Financial Results Dividend 17

Cash Dividend

• We paid back 169% of our IPO proceeds as cash

dividend since 2008

• We also distributed 6.9% per share stock dividend in

addition to TL0,14 per share cash dividend payment;

hence, total pay-out ratio realized as 115.4% in 2015

Dividend Yield

Source: Borsa Istanbul / Consolidated Data / Market Capitalization

• Our dividend yield is much higher than the market

• The average dividend yield of ISMEN is 5.6% within

the last 8 years

913

20 2015

2025

4730% 30% 30%33%

30% 30%

36%

78%

0%

8%

16%

24%

32%

40%

48%

56%

64%

72%

80%

0

5

10

15

20

25

30

35

40

45

50

May-08 May-09 May-10 May-11 May-12 May-13 March-14 March-15

Cash Dividend (TL mn) Payout Ratio

4.1%

8.2%

4.8%

4.0%

3.1%

4.1%

6.3%

10.6%

3.3%

2.3% 2.0% 2.1% 2.2%1.8% 1.9%

2.5%

0%

2%

4%

6%

8%

10%

12%

May-08 May-09 May-10 May-11 May-12 May-13 March-14 March-15

ISMEN Borsa Istanbul

Investor Relations

Investor Relations 18

Ms. Çağlan Mursaloğlu

Deputy CEO

Phone : +90 0212 350 23 48

Fax : +90 0212 350 20 01

E-mail : [email protected]

Mr. Ozan Altan

Manager, Head of IR

Phone : +90 0212 350 28 72

Fax : +90 0212 350 20 01


Mr. Alper Alkan, CFA

Senior Associate

Phone : +90 0212 350 25 22

Fax : +90 0212 350 20 01


The Investor Relations Department is responsible for the

timely communication of necessary, accurate, complete,

comprehensible and easily accessible information and

explanations, which are not considered to be trade secrets

to its shareholders and stakeholders.

http://www.isinvestment.com/wwa_ir_new.aspx

Investor Relations

Disclaimer

The information in this report is prepared by “IS YATIRIM MENKUL DEGERLER A.S.” (IS Investment) and it is not to be construed as

an offer or solicitation for the purchase or sale of any financial instrument or the provision of an offer to provide investment services.

Information, opinions and comments contained in this material are not under the scope of investment advisory services. Investment

advisory services are given according to the investment advisory contract, signed between the intermediary institutions, portfolio

management companies, investment banks and the clients. Opinions and comments contained in this report reflect the personal views of

the analysts who supplied them. The investments discussed or recommended in this report may involve significant risk, may be illiquid

and may not be suitable for all investors. Therefore, making decisions with respect to the information in this report cause inappropriate

results.

All prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Any

form of reproduction, dissemination, copying, disclosure, modification, distribution and/or publication of this report is strictly prohibited.

The information presented in this report has been obtained from sources believed to be reliable. IS Investment cannot be held responsible

for any errors or omissions or for results obtained from the use of such information.

19

Investor Relations

IS Investment 20

HEAD OFFICE

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LEVENT BRANCH

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SUBSIDIARY

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T: +90 212 350 29 00 T: +44 020 7726 3300

F: +90 212 350 29 01 F: +44 020 7726 3301

Investor Relations

PERFORMANCE & FINANCIAL RESULTS – 1H15August 4, 2015

Economy & Finance

IS Investment 1H15 Results & Performance Presentation