Georgia Capital PLC · LSE:CGEO
Georgia Capital — Q3 2024 Earnings Presentation
49 slides from Georgia Capital's earnings presentation, Oct 28, 2024
Slide 1: 3Q24 & 9M24 Results Call Presentation
3Q24 & 9M24 RESULTS CALL PRESENTATION 28 OCTOBER 2024
Slide 2: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 2
Slide 3: Key Developments
1 Sale of an 80% holding (an effective 73.9% equity stake1) in the beer and distribution business to Royal Swinkels at a premium to the business’ investment value as at 30-Jun-24. See slides 4-6 2 NAV per share (GEL) up 6.2% in 3Q24, reflecting the overall strong operating performance of our private
Slide 4: Sale of an 80% Holding in the Beer and Distribution Business to Royal Swinkels
SALE OF AN 80% HOLDING IN THE BEER AND DISTRIBUTION BUSINESS TO ROYAL SWINKELS KEY TERMS NET CASH PROCEEDS COMPLETION OF THE TRANSACTION AND THE RECEIPT OF FULL SALES PROCEEDS IS EXPECTED BEFORE 31-DEC-24 AT LEAST 63.0 US$ MILLION The disposal is subject to customary closing conditions, including th
Slide 5: Transaction Rationale
TRANSACTION RATIONALE THE SALE IS IN LINE WITH GCAP’S CAPITAL LIGHT INVESTMENT STRATEGY AND REPRESENTS ANOTHER SUCCESSFUL EXIT FROM OUR PRIVATE ASSETS THE DISPOSAL: Realises material cash proceeds, translating into a premium to the business’ investment value as at 30-Jun-24. The use of the sales pro
Slide 6: Operating Performance Development in the Beer and Distribution Business
OPERATING PERFORMANCE DEVELOPMENT IN THE BEER AND DISTRIBUTION BUSINESS EBITDA MARGIN (7.4)% 5.9% 7.9% 13.7% 15.8% STRONG TOTAL REVENUE AND EBITDA GROWTH WITH A 29% AND 79% CAGR, RESPECTIVELY, OVER THE 197.7 PAST THREE YEARS 175.3 114.3 31.2 92.4 24.1 89.5 9.0 5.5 (6.7) 2019 2020 2021 2022 2023 Reve
Slide 7: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 NAV PER SHARE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW UPDATE ON DELEVERAGING 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 7
Slide 8: NAV per Share (GEL) Movement in 3Q24
NAV PER SHARE (GEL) MOVEMENT IN 3Q24 PRIVATE PORTFOLIO NAV PER SHARE (GEL) UP 0.0% +7.5% -3.8% -0.3% +0.4% +2.4% +6.2% 6.2% Q-O-Q IN 3Q24 3 ▪ The increase in NAV per share (GEL) in 3Q24 reflects the robust value creation across our private portfolio companies and an accretive impact of share buyback
Slide 9: Strong NAV per Share Growth
STRONG NAV PER SHARE GROWTH STRONG NAV PER SHARE (GEL) GROWTH NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW WITH 11.6% CAGR SINCE DEC-18 +11.6% CAGR IN US$ AND GBP TERMS, NAV PER SHARE CAGR STANDS AT 11.2% AND 10.2%, RESPECTIVELY +6.2% 82.94 83.41 78.55 65.56 63.03 46.84 48.12 44.32 Dec-18 Dec-19 Dec-20
Slide 10: Share Buyback and Cancellation Programme
SHARE BUYBACK AND CANCELLATION PROGRAMME DEVELOPMENT OF GCAP’S SHARE BUYBACK AND CANCELLATION PROGRAMMES 10.8 MILLION SHARES (US$ 123.3 Number of issued shares MILLION IN VALUE) REPURCHASED 39.4 40.2 47.92 47.1 44.8 43.2 39.8 AND CANCELLED SINCE DEMERGER IN 2018, REPRESENTING 22.5%1 OF THE $123 ISSU
Slide 11: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 NAV PER SHARE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW UPDATE ON DELEVERAGING 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 11
Slide 12: Aggregated Revenue Development Across Private Portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION RECORD AGGREGATED QUARTERLY REVENUES, UP +8.9% 11.9% Y-O-Y IN 3Q24 AND UP 8.9% Y-O-Y IN 9M24 1,656 1,521 439 ➢ Aggregated revenue of large and investment +11.9% 427 stage portfolio companies up 15.5% and 11.2% y-o-y in 3Q24 and 9M24
Slide 13: Aggregated EBITDA Development Across Private Portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION +15.3% AGGREGATED EBITDA UP 16.5% Y-O-Y IN 3Q24 AND 227 UP 15.3% Y-O-Y IN 9M24 197 52 35 +16.5% 48 40 79 68 19 21 14 12 34 46 121 126 3Q23 3Q24 9M23 9M24 Other portfolio companies Other portfolio companies Investment stage portfolio
Slide 14: Aggregated Cash Balance & Net Operating Cash Flow Development
AGGREGATED CASH BALANCE & NET OPERATING CASH FLOW DEVELOPMENT ACROSS PRIVATE PORTFOLIO TOTAL AGGREGATED NET OPERATING CASH FLOW TOTAL AGGREGATED CASH BALANCE OF PRIVATE BUSINESSES (GEL MILLION) (GEL MILLION) +2.1x 215 -1.7% 31-Dec-23 275 +2.0x 1 102 103 30-Jun-24 273 -1.1% 51 30-Sep-24 270 3Q23 3Q24
Slide 15: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 NAV PER SHARE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW UPDATE ON DELEVERAGING 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 15
Slide 16: Net Capital Commitment (NCC) Overview
NET CAPITAL COMMITMENT (NCC) OVERVIEW Change Change US$ Million 30-Sep-23 30-Jun-24 30-Sep-24 (y-o-y) (q-o-q) NCC RATIO IMPROVED BY 3.0 PPTS Cash and liquid funds 37.5 -0.4% 25.1 48.5% 37.3 Q-O-Q (FLAT AT 15.9% Y-O-Y AS OF Loans issued 3.3 29.1% 4.1 5.7% 4.3 30-SEP-24) Accrued dividend income - NMF
Slide 17: NCC Ratio Development Overview
NCC RATIO DEVELOPMENT OVERVIEW NCC AND NCC RATIO DEVELOPMENT OVERVIEW1 NCC REPRESENTS AN AGGREGATED VIEW OF ALL CONFIRMED, AGREED 385.8 AND EXPECTED CAPITAL OUTFLOWS 365.9 AT THE GCAP HOLDCO LEVEL 345.7 42.5% We are targeting to reduce the balance of “net 39.8% 250.1 235.5 debt and guarantees issued
Slide 18: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 18
Slide 19: Strong Real GDP Growth in 8M24, with Inflation Below Target
STRONG REAL GDP GROWTH IN 8M24, WITH INFLATION BELOW TARGET GEORGIA’S ECONOMY CONTINUES TO EXPAND, WITH PRELIMINARY ECONOMIC GROWTH ANNUAL INFLATION BELOW THE 3% TARGET SINCE APRIL 2023, WITH SEPTEMBER 2024 AT 10.0% Y-O-Y IN 8M24 INFLATION AT 0.6% Y-O-Y 15% 13% 12% 12% Headline Inflation Target End
Slide 20: Stronger-than-Expected Economic Growth Supported by Robust Domestic Activity
STRONGER-THAN-EXPECTED ECONOMIC GROWTH IS SUPPORTED BY ROBUST DOMESTIC ACTIVITY AND RECOVERING EXTERNAL FLOWS LOANS GROWTH DECOMPOSITION BY SECTORS, (ON A CONSTANT CURRENCY BASIS) GENERAL GOVERNMENT FISCAL EXPENSES, GEL BLN 25% Legal Entities Households Total Loans Growth rate, % Y-o-Y Current Expen
Slide 21: Deleveraging Underway as External Balance Sheet Shows Significant Improvement
DELEVERAGING UNDERWAY AS EXTERNAL BALANCE SHEET SHOWS SIGNIFICANT IMPROVEMENT CAB NARROWED TO -6.0% OF GDP, SUPPORTED BY GROWTH IN THE TRANSFER AND SERVICES NET EXTERNAL EARNINGS TURNED POSITIVE IN SUMMER AS SEASONAL FACTORS COME BALANCE INTO PLAY Goods, net Services, net Investment income, net Net
Slide 22: Overview of the Continued Volatility in Market Sentiment
OVERVIEW OF THE CONTINUED VOLATILITY IN MARKET SENTIMENT DESPITE RECENT DEPRECIATION, THE GEL HAS SINCE RECOVERED ITS VALUE, WIDENED SOVEREIGN SPREAD REFLECTS RECENT POLITICAL DEVELOPMENTS SHOWING ONLY 1.1% YTD DEPRECIATION 700 EMBI diversified sovereign spread Georgia sovereign z-spread 600 3.6 3.4
Slide 23: Macro Policy Stance Continues to Be Appropriate
MACRO POLICY STANCE CONTINUES TO BE APPROPRIATE NET NBG INTERVENTIONS ON THE FX MARKET AND OFFICIAL RESERVE ASSETS THE OPERATING BALANCE SURGES DUE TO HIGHER-THAN-EXPECTED TAX REVENUE COLLECTION Net Interventions, US$ mln (LHS) Reserve Assets, US$ bln (RHS) 5.4 213 5.5 250 205 8000 176 Tax Revenues
Slide 24: Macroeconomic Wrap-Up
STRONG GDP PERFORMACE BELOW-TARGET INFLATION EXTERNAL DEMAND IS SUPPORTING GROWTH AGAIN MACROECONOMIC ROBUST EXTERNAL BALANCE SHEET WRAP-UP MACROECONOMIC POLICY FRAMEWORK REMAINS APRROPRIATE 24
Slide 25: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 25
Slide 26: Portfolio Value as of 30-Sep-24
PORTFOLIO VALUE AS OF 30-SEP-24 % SHARE IN TOTAL PORTFOLIO VALUE: 78% OF OUR PORTFOLIO 91% IS OF OUR PORTFOLIO 33% 5% 19% 12% 7% 7% 5% 3% 9% ISVALUED VALUED EXTERNALLY EXTERNALLY1 1 GBP 36.8 OPTION MULTIPLE: 10.9x 11.5x 11.2x 13.0x 10.6x BGEO VALUATION2 8.8x LTM P/E LTM EV/EBITDA3 EV/EBITDA4 LTM EV/
Slide 27: Portfolio Value Development in 3Q24
PORTFOLIO VALUE DEVELOPMENT IN 3Q24 PORTFOLIO VALUE DOWN 0.7% Q-O-Q TO GEL 3.5 BILLION IN 3Q24 3, 3, PRIVATE PORTFOLIO VALUE CREATION IN 3Q24 3) ) PRIVATE PORTFOLIO VALUE CREATION GEL MILLION GEL million LISTED AND OBSERVABLE PORTFOLIO PRIVATE PORTFOLIO VALUE Others 62.9 VALUE DOWN BY 8.3% UP BY 4.6
Slide 28: Retail (Pharmacy) Business Operating Performance Overview
RETAIL (PHARMACY) BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +3.9% 618 RETAIL (PHARMACY) 594 +4.6% KEY DRIVERS 499 ▪ Total revenue growth in 3Q24 mainly reflects a 6.0% 206 471 +6.0% 197 y-o-y increase in retail revenues, driven by significant -8.0% recent expans
Slide 29: Retail (Pharmacy) Business Valuation Overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q24 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q +2.2% -5.5% +0.0% +6.3% 8.8x 8.8x 3 30 ) ) nterprise value Net change nterprise value Net debt inc. inority uity value 30-Jun-24 30-Sep-24 3
Slide 30: Insurance Business Operating Performance Overview
INSURANCE BUSINESS OPERATING PERFORMANCE OVERVIEW INSURANCE REVENUE PRE-TAX PROFIT DEVELOPMENT +44.7% 220 INSURANCE KEY DRIVERS +49.8% 152 P&C Insurance 111 ▪ The increase in insurance revenue is mainly 32.2 GEL MILLION +65.0% driven by the growth in the motor, agricultural and credit life insurance
Slide 31: Insurance Business Valuation Overview
Externally valued1 INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q24 IMPLIED LTM P/E MULTIPLE (GEL MILLION) DEVELOPMENT Change q-o-q +4.1% 407 12.4x 391 97 10.9x 96 ) ) 296 310 uity value perating ultiple change ividends uity value 30-Jun-24 30-Sep-24 30 un 2 performance paid 3
Slide 32: Hospitals Business Operating Performance Overview
HOSPITALS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT1 EBITDA2 DEVELOPMENT +2.5% HOSPITALS -1.2% 237 243 KEY DRIVERS 38.2 37.8 ▪ Total revenue increase in 3Q24 reflects the business’ 85 78 GEL MILLION 10.5 8.9 gradual return to its normal operational levels +9.0% following mandatory
Slide 33: Hospitals Business Valuation Overview
Externally valued1 HOSPITALS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q24 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q +1.0% +1.1% +0.0% +0.9% 12.5x 11.5x 3 3 ) ) nterprise value Net change nterprise value Net debt inc. inority uity value 30-Jun-24 30-Sep-24 30 un 2
Slide 34: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 34
Slide 35: Liquidity Outlook
LIQUIDITY OUTLOOK LIQUIDITY DEVELOPMENT OVERVIEW (US$ MILLION) GROSS DEBT (US$ million) LIQUIDITY UP BY 90.6% IN 3Q24, REFLECTING 300 300 365 365 300 150 150 150 STRONG DIVIDEND INFLOWS DURING THE QUARTER Cash receipt from the water utility business sale Cancellation of US$ 65 million GCAP Eurobond
Slide 36: Dividend Income Outlook
DIVIDEND INCOME OUTLOOK RECURRING CASH DIVIDEND INCOME FROM PORTFOLIO COMPANIES GEL 191.9 MILLION DIVIDEND INCOME IN 9M24 1 180 DIVIDEND INCOME 3Q24 9M24 169 (GEL million) GEL MILLION BOG (recurring cash and buyback dividends) 96.3 122.2 55 47 BOG (one-off buyback dividend) 22.6 22.6 Renewable Energ
Slide 37: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 37
Slide 38: Solid Performance Across Our Portfolio
SOLID PERFORMANCE ACROSS OUR PORTFOLIO PERFORMANCE HIGHLIGHTS Sale of an 80% holding (an effective 73.9% equity stake) in the beer and distribution business to Royal Swinkels at a premium to the business’ ✓ investment value as at 30-Jun-2 , validating GCAP’s NAV and marking the delivery of our key s
Slide 39: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q24 & 9M24 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q24 & 9M24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 39
Slide 40: Renewable Energy Business Operating Performance Overview
RENEWABLE ENERGY BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT +17.3% RENEWABLE ENERGY 13.5 +24.5% 11.5 KEY DRIVERS 10.4 ▪ 3Q24 revenue was up 7.6% y-o-y, resulting +7.6% US$ MILLION 7.7 from both improved electricity generation 5.4 +11.2% 8.4 (up 5.5% y-o-y) and inc
Slide 41: Renewable Energy Business Valuation Overview
Externally valued1 RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q24 EQUITY FAIR VALUE COMPOSITION (US$ MILLION) AT 30-SEP-24 (US$ MILLION) Change q-o-q +0.6% +1.0% +0.3% 19 Total value US$ 88 0) 68 nterprise value Net change in V nterprise value Net debt uity value Oper
Slide 42: Education Business Operating Performance Overview
EDUCATION BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT +26.3% EDUCATION 45.7 KEY DRIVERS 36.1 GEL MILLION ▪ The third quarter is usually a slow season for the education business, as the schools are not operational during the July-August holidays. +10.1% ▪ A y-o-y in
Slide 43: Education Business Valuation Overview
Externally valued1 EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q24 LTM EV/EBITDA DEVELOPMENT4 (GEL MILLION) Change q-o-q -5.5% +4.3% +53.7% -8.0% -6.4% 13.0x 13.0x 0 ) ) 3 ) nterprise Net change nterprise nvestment Net debt inority uity value 30-Jun-24 30-Sep-24 value in V va
Slide 44: Clinics & Diagnostics Business Operating Performance Overview
CLINICS & DIAGNOSTICS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT1 EBITDA2 DEVELOPMENT +20.8% 59.1 CLINICS & DIAGNOSTICS 48.9 15.9 KEY DRIVERS 13.5 ▪ The growth in revenue and EBITDA of the +15.0% 43.3 GEL MILLION +40.0% combined clinics and diagnostics business in 35.5 3Q23 reflects
Slide 45: Clinics & Diagnostics Business Valuation Overview
Externally valued1 CLINICS & DIAGNOSTICS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q24 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q 2.4% +12.7% +0.0% -3.0% 11.0x 10.6x 0 ) 3) nterprise value Net change nterprise value Net debt inc. inority uity value 30-Jun-24 30-Sep-
Slide 46: Deleveraging Across Our Private Portfolio
DELEVERAGING ACROSS OUR PRIVATE PORTFOLIO TARGET AGGREGATED LEVERAGE ADJUSTED NET DEBT/EBITDA 30-JUN-24 CHANGE 30-SEP-24 (OVER THE CYCLE) ACROSS OUR PRIVATE LARGE AND INVESTMENT STAGE LARGE PORTFOLIO COMPANIES PORTFOLIO COMPANIES AT Retail (pharmacy)1 2.4x -0.2x 2.2x Up to 1.5x 3.1x AS OF 30-SEP-24
Slide 47: Private Portfolio Companies' Debt Maturity Profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 30 SEPTEMBER 2024 2024 2025 2026 2027-2036 Total (GEL MILLION) Large portfolio companies 46.6 141.0 107.2 217.5 512.3 Retail (Pharmacy)1 38.4 67.5 43.2 67.7 216.8 Insurance (P&C and Medical) - 3.0 6.5 20.0 29.5 Hospitals 8.
Slide 48: Valuation Peer Group
VALUATION PEER GROUP RETAIL P&C MEDICAL HOSPITALS (PHARMACY) INSURANCE INSURANCE • NEUCA S.A. | Poland • Dhipaya Insurance | Thailand • Powszechny Zaklad Ubezpieczen SA | • Medicover AB | Sweden Poland • Sopharma Trading AD | Bulgaria • Zavarovalnica Triglav | Slovenia • EMC Instytut Medyczny SAEMC
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