Georgia Capital PLC · LSE:CGEO
Georgia Capital — 9M21 Earnings Presentation
49 slides from Georgia Capital's earnings presentation, Nov 16, 2021
Slide 1: 3Q21 & 9M21 Results Call Presentation
3Q21 & 9M21 RESULTS CALL PRESENTATION 16 November 2021
Slide 2: Contents
CONTENTS 01 STRATEGIC DEVELOPMENTS 02 COVID-19 UPDATE | GEORGIA 03 3Q21 & 9M21 RESULTS OVERVIEW 04 3Q21 & 9M21 NAV DEVELOPMENT 05 3Q21 & 9M21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 2
Slide 3: Buyout of the minority shareholders in Retail (Pharmacy)
RETAIL (PHARMACY) BUYOUT OF THE MINORITY SHAREHOLDERS IN RETAIL (PHARMACY) INITIAL TERMS RENEGOTIATED TERMS EFFECTIVE DURING 2023 SPREAD OVER THE NEXT 6 YEARS RECONFIRMING 6.00x OUR CONFIDENCE 5.25x EV/EBITDA MULTIPLE 4.50x 360o IN THE VALUE ANALYSIS CREATION POTENTIAL OF THE RETAIL BUSINESS IN LINE
Slide 4: Expansion of the education business in the affordable segment
EDUCATION EXPANSION OF THE EDUCATION BUSINESS IN THE AFFORDABLE SEGMENT CAPACITY DEVELOPMENT HIGHLIGHTS WE ARE SCALING UP OUR AFFORDABLE AND HIGH-QUALITY K-12 EDUCATION IN GEORGIA, IN LINE WITH OUR CAPITAL ALLOCATION PROGRAMME AS +80.1% 760 ANNOUNCED IN NOVEMBER 2020 15% 5,060 800 RECENT INVESTMENT
Slide 5: Other businesses: commercial real estate sales
OTHER BUSINESSES SALES OF US$ 45.0 MILLION COMMERCIAL REAL ESTATE PROPERTIES SINCE JUNE 2021 TRANSACTION DETAILS - US$ 4.6 MILLION PREMIUM TO 31 MARCH 2021 BOOK VALUES ADDITIONAL SALES OF US$ 10.3 MILLION COMMERCIAL REAL ESTATE Premium to gross value PROPERTIES IN SEP-NOV 2021, +11.3% DEMONSTRATING
Slide 6: Fixed-income fund domiciled in Luxembourg
FIXED-INCOME FUND WE HAVE PROMOTED A FIXED-INCOME FUND, DOMICILED IN LUXEMBOURG FUND OFFERS HIGH YIELD NICHE MARKET AND MOSTLY SOVEREIGN/QUASI-SOVEREIGN RISK FUNDS’ OBJECTIVE IS TO ACHIEVE INVESTMENT STRATEGY ACHIEVED 24% DOLLAR DENOMINATED GROSS RETURN DURING MAY-19 – AUG-21 HIGH SINGLE-DIGIT DOLLA
Slide 7: Contents
CONTENTS 01 STRATEGIC DEVELOPMENTS 02 COVID-19 UPDATE | GEORGIA 03 3Q21 & 9M21 RESULTS OVERVIEW 04 3Q21 & 9M21 NAV DEVELOPMENT 05 3Q21 & 9M21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 7
Slide 8: COVID-19 statistics
COVID-19 STATISTICS COVID-19 CASES: DYNAMICS IN GEORGIA 37.9% OF TOTAL ADULT POPULATION HAS RECEIVED AT LEAST A SINGLE VACCINE DOSE, WHILE 33.9% IS FULLY VACCINATED AS OF 15 NOVEMBER 2021 900 Total cases (LHS) Daily cases (RHS) 7 % OF ADULT POPULATION FULLY 800 VACCINATED 9% 6 700 +30.4 ppts 5 33.9%
Slide 9: Real GDP on track for double-digit growth, up 11.3% y-o-y in 9M21
REAL GDP ON TRACK FOR DOUBLE-DIGIT GROWTH, UP 11.3% Y-O-Y IN 9M21 Real GDP Y-o-Y change 2021 Real GDP change vs 2019 45% REAL GDP UP 5.4% COMPARED TO 9M19 KEY DRIVERS 26% ➢ Expansionary fiscal policy boosting domestic demand and continuing to contribute significantly to GDP growth; 21% 19% ➢ Robust
Slide 10: Fast indicators show recovery sustaining pace
FAST INDICATORS SHOW RECOVERY SUSTAINING PACE Remittances, y/y Remittances, vs 2019 Exports, y/y Exports, vs 2019 Imports, y/y Imports, vs 2019 180% 180% 80% 80% 80% 80% 120% 120% 40% 24% 40% 40% 40% 22% 60% 40% 60% 0% 0% 15% 0% 13% 0% 0% 0% -40% -40% 9% -60% -60% -40% -40% -80% -80% Jan Jan Oct Mar
Slide 11: Georgian Lari - top performer in the region
GEORGIAN LARI - TOP PERFORMER IN THE REGION AS OF 10 NOVEMBER, GEL HAS APPRECIATED BY 3.6% COMPARED TO THE BEGINNING OF THE YEAR AND BY 8.6% COMPARED TO THE YEAR-TO-DATE LOW 170 GEL APPRECIATION DRIVERS 160 150 140 ➢ Record high remittance inflows, increasing by 28% Y-o-Y in 130 9M21 (+36% compared
Slide 12: Inflation to decelerate from the 2nd half of 2022
INFLATION TO DECELERATE FROM THE 2ND HALF OF 2022 Inflation Y-o-Y vs. inflation target Sources: NBG, GeoStat 14 Headline Inflation Target Core Inflation 12.8 14 SUPPLY SIDE PRESSURES PERSIST 12 12 10 10 ➢ We expect inflation to remain high throughout the year, and 8 6.3 8 decelerate after peaking in
Slide 13: Debt and fiscal deficit on course for consolidation
DEBT AND FISCAL DEFICIT ON COURSE FOR CONSOLIDATION Public debt Sources: MoF External public debt to GDP, % Total public debt to GDP, % FISCAL SUPPORT TO MODERATE 59.9% 60% 52.2% 48.5% ➢ Fiscal expenditures grew by 5% y/y in real terms in 9M21 (14% in 50% 47.5% nominal), including a 20% growth (30%
Slide 14: Contents
CONTENTS 01 STRATEGIC DEVELOPMENTS 02 COVID-19 UPDATE | GEORGIA 03 3Q21 & 9M21 RESULTS OVERVIEW 04 3Q21 & 9M21 NAV DEVELOPMENT 05 3Q21 & 9M21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 14
Slide 15: Aggregated revenue development across private portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO +35.9% AGGREGATED REVENUE +25.8% UP 24.6% Y-O-Y IN 3Q21 AND UP 34.4% +34.4% 1,423 FROM 3Q19 239 +24.6% 1,130 53 1,047 GEL MILLION 506 198 ▪ 9M21 aggregated revenue 142 52 up 25.8% y-o-y and up 406 89 15 376 35.9% from 9M19 83 17 64 19 13 300 30
Slide 16: Aggregated EBITDA development across private portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO +50.5% +32.1% AGGREGATED EBITDA +45.4% UP 27.4% Y-O-Y IN 3Q21 +27.4% AND UP 32.1% FROM 298 3Q19 28 109 31 GEL MILLION 8 198 9 205 85 1 ▪ 9M21 aggregated EBITDA 82 11 14 up 45.4% y-o-y and up 5 10 11 32 50.5% from 9M19 12 67 62 91 186 159 239 3Q1
Slide 17: Aggregated cash balance & net operating cash flow development
AGGREGATED CASH BALANCE & NET OPERATING CASH FLOW DEVELOPMENT ACROSS PRIVATE PORTFOLIO TOTAL AGGREGATED NET OPERATING CASH FLOW TOTAL AGGREGATED CASH BALANCE OF PRIVATE BUSINESSES (GEL MILLION) (GEL MILLION) +76.6% 31-Dec-19 183 2.1x 2.7x -13.8% +23.9% 289 31-Dec-20 392 249 -0.1% 137 111 30-Jun-21 3
Slide 18: Operating performance: Healthcare Services
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +36.8% +48.6% HEALTHCARE SERVICES 296 +36.5% KEY DRIVERS +53.0% GEL MILLION ➢ The number of admissions up 216 +78.1% 105.1% and 81.1% y-o-y in 3Q21 at 199 +48.0% hospitals and clinics,
Slide 19: Operating performance: Retail (Pharmacy)
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +28.1% +18.3% RETAIL (PHARMACY) 566 KEY DRIVERS 478 442 +16.5% GEL MILLION ➢ Robust performance of the Retail +31.7% (Pharmacy), reflecting overall improvement in economic acti
Slide 20: Operating performance: Water Utility
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) REVENUE DEVELOPMENT EBITDA DEVELOPMENT +27.6% +54.0% 152 WATER UTILITY 14 +42.6% +34.6% 119 +91.9% KEY DRIVERS 15 99 GEL MILLION +58.2% ➢ Water supply revenue up 54.9% y-o- +47.5% 97 y, reflecting revised water utili
Slide 21: Operating performance: Insurance
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) GROSS PREMIUMS WRITTEN NET INCOME DEVELOPMENT +8.6% +15.3% INSURANCE 158 145 KEY DRIVERS 137 -5.8% ➢ Net premiums earned up 18.0% y-o-y in GEL MILLION 59 +12.7% 3Q21, reflecting rebounding demand +0.7% 68 55 and incr
Slide 22: Operating performance: Renewable Energy
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE INVESTMENT STAGE PORTFOLIO COMPANIES REVENUE DEVELOPMENT EBITDA DEVELOPMENT -2.8% 35 34 RENEWABLE ENERGY 1 -6.5% 4 KEY DRIVERS 12 -15.7% 28 ➢ Electricity generation levels down 10 26 9.5% y-o-y in 3Q21, reflecting: GEL MILLION ▪ a) lower generation le
Slide 23: Operating performance: Education
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE INVESTMENT STAGE PORTFOLIO COMPANIES (CONT’D) REVENUE DEVELOPMENT EBITDA DEVELOPMENT EDUCATION +14.5% KEY DRIVERS GEL MILLION 20 ➢ Revenue up by 6.5% y-o-y in 3Q21, +25.4% reflecting a 15.2% y-o-y growth in 17 average tuition revenue per learner in 9M
Slide 24: Contents
CONTENTS 01 STRATEGIC DEVELOPMENTS 02 COVID-19 UPDATE | GEORGIA 03 3Q21 & 9M21 RESULTS OVERVIEW 04 3Q21 & 9M21 NAV DEVELOPMENT 05 3Q21 & 9M21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 24
Slide 25: NAV per share (GEL) development overview
NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW NAV PER SHARE UP 2.0x SINCE THE START OF THE COVID-19 PANDEMIC CONTROLLABLE (PRIVATE) NAV PER SHARE UP 2.5x SINCE THE START OF THE COVID-19 PANDEMIC % Change % Change -25.0% -0.5% +69.3% +22.1% -1.6% +15.8% -35.6% +4.9% +19.5% +27.2% -2.7% +16.4% q-o-q q-o-q
Slide 26: NAV per share (GEL) movement in 3Q21
NAV PER SHARE (GEL) MOVEMENT IN 3Q21 NAV PER SHARE CHANGE % +2.6% +7.3% -0.4% +0.1% +0.4% -0.3% NMF +9.7% NAV PER SHARE (GEL) UP 9.7% IN 3Q21 • NAV per share (GBP) up 13.7% in 3Q21 • 9.7% growth in 3Q21 NAV per share (GEL) mainly reflects value creation across our resilient private portfolio and a 1
Slide 27: NAV per share (GEL) movement in 9M21
NAV PER SHARE (GEL) MOVEMENT IN 9M21 NAV PER SHARE CHANGE % +4.9% +18.8% +1.4% +1.3% +0.5% -1.2% -1.4% +24.2% NAV PER SHARE (GEL) UP 24.2% IN 9M21 • NAV per share (GBP) up 31.0% in 9M21 • 24.2% growth in 9M21 NAV per share (GEL) on the back of strong value creation across our resilient private portf
Slide 28: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 COVID-19 UPDATE | GEORGIA 03 3Q21 & 9M21 RESULTS OVERVIEW 04 3Q21 & 9M21 NAV DEVELOPMENT 05 3Q21 & 9M21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 28
Slide 29: Portfolio value development in 3Q21
PORTFOLIO VALUE DEVELOPMENT IN 3Q21 PORTFOLIO VALUE UP 6.8% TO GEL 3.47 BILLION IN 3Q21 WATER UTILITY, BOG AND HEALTHCARE SERVICES CONTRIBUTED 79% TO THE TOTAL PORTFOLIO VALUE % SHARE OF LISTED ASSETS GROWTH IN 3Q21 17.7% 18.5% 1% -5% 2% 6% 4 3 -12 14 32% 72 TOTAL PORTFOLIO GEL MILLION 17% 37 VALUE
Slide 30: Portfolio value development in 9M21
PORTFOLIO VALUE DEVELOPMENT IN 9M21 PORTFOLIO VALUE UP 19.3% TO GEL 3.47 BILLION IN 9M21 HEALTHCARE SERVICES, WATER UTILITY AND BOG CONTRIBUTED 73% TO THE TOTAL PORTFOLIO VALUE % SHARE OF LISTED ASSETS GROWTH IN 9M21 18.3% 18.5% 4% 0% 5% 21-1 6% 30 27% 35 152 GEL MILLION 12% 65 TOTAL PORTFOLIO VALUE
Slide 31: Portfolio value as of 30-Sep-21
PORTFOLIO VALUE AS OF 30-SEP-21 % SHARE IN TOTAL PORTFOLIO VALUE: 18% 21% 18% 18% 8% 6% 4% 7% 83% OF OUR PORTFOLIO IS MULTIPLE: BGEO 10.5X 9.0X 9.2X 12.0X – 12.3X 10.3X 12.5X VALUED EXTERNALLY1 PRICE ON LSE GBP 15.54 LTM EV/EBITDA2 LTM EV/EBITDA3 LTM EV/EBITDA2 LTM P/E4 EV/EBITDA5 LTM EV/EBITDA 724
Slide 32: Healthcare Services business valuation overview
Externally valued1 HEALTHCARE SERVICES BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q21 (GEL MILLION) IMPLIED LTM EV/EBITDA 2 Change q-o-q +4.5% +2.1% NMF +5.6% DEVELOPMENT (incl. IFRS 16) 10.6x 10.5x 30-Jun-21 30-Sep-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Sep-21
Slide 33: Retail (Pharmacy) business valuation overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q21 IMPLIED LTM EV/EBITDA (GEL MILLION) DEVELOPMENT Change q-o-q -2.9% +3.3% +6.4% (incl. IFRS 16) +4.4% 9.3x 9.2x 30-Jun-21 30-Sep-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Sep-21 30-
Slide 34: Water Utility business valuation overview
Externally valued1 WATER UTILITY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q21 (GEL MILLION) IMPLIED LTM EV/EBITDA Change q-o-q +4.5% -5.6% +13.0% MULTIPLE DEVELOPMENT 9.3x 9.0x 30-Jun-21 30-Sep-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Sep-21 30-Jun-21 Change 31
Slide 35: P&C Insurance business valuation overview
Externally valued1 P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q21 IMPLIED LTM P/E (GEL MILLION) MULTIPLE DEVELOPMENT Change q-o-q NMF +4.9% 12.0x 12.0x 30-Jun-21 30-Sep-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Sep-21 30-Jun-21 Change 31-Dec-20 Chang
Slide 36: Georgia Capital leverage & liquidity profile
GEORGIA CAPITAL LEVERAGE & LIQUIDITY PROFILE LTV RATIO1 IS ON TRACK TO THE TARGETED THRESHOLD OF <30% US$ 133 MILLION LIQUID FUNDS AS OF 30-SEP-21 44.1% 41.9% Pre-COVID average: 22% Cash 33.5% 44 30% 27.9% 28.9% 31.2% 27.4% 51 TOTAL Marketable 20.0% 17.6% 19.2% 25.8% 25.4% securities 133 US$ MILLION
Slide 37: Contents
CONTENTS 01 STRATEGIC DEVELOPMENTS 02 COVID-19 UPDATE | GEORGIA 03 3Q21 & 9M21 RESULTS OVERVIEW 04 3Q21 & 9M21 NAV DEVELOPMENT 05 3Q21 & 9M21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 37
Slide 38: Solid performance across our private portfolio, with outlook even stronger
SOLID PERFORMANCE ACROSS OUR PRIVATE PORTFOLIO, WITH OUTLOOK BEING EVEN STRONGER PERFORMANCE HIGHLIGHTS Robust operating performance of our private portfolio companies. Aggregated revenues and EBITDA up 24.6% and 27.4%, y-o-y, respectively, leading ✓ to record aggregated quarterly net operating cash
Slide 39: Contents
CONTENTS 01 STRATEGIC DEVELOPMENTS 02 COVID-19 UPDATE | GEORGIA 03 3Q21 & 9M21 RESULTS OVERVIEW 04 3Q21 & 9M21 NAV DEVELOPMENT 05 3Q21 & 9M21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 39
Slide 40: Private portfolio companies' debt maturity profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 30 SEPTEMBER 2021 (GEL MILLION) 2021 2022 2023 2024+ Total Large portfolio companies 50.1 192.7 30.4 566.0 839.2 Healthcare Services 43.3 187.5 30.1 80.2 341.1 Retail (Pharmacy) 6.8 5.0 - - 11.8 Water Utility - 0.2 0.3 485.
Slide 41: NAV statement | 3Q21
NAV STATEMENT | 3Q21 1.Value 2a. 3.Operating 4. Liquidity 2c. GEL thousands unless otherwise noted 30-Jun-21 2b. Buybacks Management/ FX / 30-Sep-21 Change % Creation Investments Dividends Expenses Other Listed Portfolio Companies BoG 575,394 66,246 - - - - - 641,640 11.5% Listed Portfolio Value 575
Slide 42: NAV statement | 9M21
NAV STATEMENT | 9M21 1.Value 2a. 3.Operating 4. Liquidity GEL thousands unless otherwise noted 31-Dec-20 2b. Buybacks 2c. Dividends 30-Sep-21 Change % Creation Investments Expenses Management/ FX / Other Listed Portfolio Companies BoG1 531,558 110,082 - - - - - 641,640 20.7% Listed Portfolio Value 5
Slide 43: Value creation in private portfolio | 3Q21
VALUE CREATION IN PRIVATE PORTFOLIO | 3Q21 Operating Multiple Change Portfolio Businesses Greenfields Value Creation in 3Q21 Performance and FX 244.6 GEL thousands (1) (2) (3) (1)+(2)+(3) BoG 66,246 Total Listed Portfolio Companies 66,246 Large Portfolio Companies 236,931 - (51,672) 185,259 Healthca
Slide 44: Value creation in private portfolio | 9M21
VALUE CREATION IN PRIVATE PORTFOLIO | 9M21 Operating Multiple Change Portfolio Businesses Greenfields Value Creation in 9M21 Performance and FX 585.1 GEL thousands (1) (2) (3) (1)+(2)+(3) BoG 110,082 Total Listed Portfolio Companies 110,082 Large Portfolio Companies 562,739 - (147,390) 415,349 Healt
Slide 45: Medical Insurance business valuation overview
Externally valued1 MEDICAL INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q21 IMPLIED LTM P/E MULTIPLE (GEL MILLION) DEVELOPMENT Change q-o-q +6.0% +4.5% +5.5% 12.3x 12.3x 30-Jun-21 30-Sep-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Sep-21 30-Jun-21 Change 31-
Slide 46: Renewable Energy business valuation overview
Internally valued RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q21 EQUITY FAIR VALUE COMPOSITION (GEL MILLION) AT 30-SEP-21 Change q-o-q -3.7% -2.3% -5.4% (GEL MILLION) 44 Total value 209 165 Operational assets Pipeline projects VALUATION HIGHLIGHTS GEL million, unless
Slide 47: Education business valuation overview
Internally valued EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q21 LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q -3.3% +21.8% -23.2% +0.5% +3.1% 12.5x 12.5x 2 30-Jun-21 30-Sep-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Sep-21 30-Jun-21 Change 31-Dec-
Slide 48: Valuation peer group
VALUATION PEER GROUP HEALTHCARE RETAIL SERVICES MEDICAL (PHARMACY) INSURANCE • Med Life S.A. | Romania • NEUCA S.A. | Poland • Powszechny Zaklad Ubezpieczen SA | Poland • EMC Instytut Medyczny SA | Poland • Sopharma Trading AD | Bulgaria • European Reliance General Insurance Company S.A. | Greece •
Slide 49: Forward looking statements
FORWARD LOOKING STATEMENTS 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, financing needs, plans or int