Georgia Capital Plc · LSE:CGEO
Georgia Capital — FY2023 Earnings Presentation
48 slides from Georgia Capital's earnings presentation, Feb 22, 2024
Slide 1: 4Q23 & FY23 Results Call Presentation
4Q23 & FY23 RESULTS CALL PRESENTATION 22 FEBRUARY 2024
Slide 2: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 2
Slide 3: Key Developments in 4Q23
1 NAV per share (GEL) up 7.7% q-o-q to GEL 82.94 (GBP 24.23), reflecting strong value creation across our portfolio companies. NAV per share (GEL) was up 26.5% y-o-y in FY23 2 NCC ratio improved by 0.3 ppts q-o-q to 15.6% as at 31-Dec-23 (a 5.5 ppts improvement y-o-y), despite the launch of the US$
Slide 4: 2023 Lookback
2023 LOOKBACK 01 02 03 04 05 06 TRANSFER TO LSE ISSUANCE OF US$ SHARE BUYBACK BUYOUT OF THE SALE OF EXPANSION OF STANDARD LISTING 150 MILLION PROGRAMMES MINORITY HOSPITALITY THE EDUCATION SUSTAINABILITY- SHAREHOLDERS IN BUSINESS ASSETS BUSINESS LINKED BOND RETAIL (PHARMACY) Following the approval of
Slide 5: Proposed Acquisition of Ameriabank CJSC by Bank of Georgia Group PLC
PROPOSED ACQUISITION OF AMERIABANK CJSC BY BANK OF GEORGIA GROUP PLC KEY TERMS TRANSACTION PRICE VALUATION HIGHLIGHTS NET ASSET VALUE P/E 303.6 0.65x 2.6x US$ MILLION AS AT 31 OCTOBER 2023 AS AT 2023 The transaction is subject to shareholder and regulatory approvals and is expected to close in 1Q24.
Slide 6: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 6
Slide 7: Real GDP up by 7.5% in 2023, while inflation has fallen below the target
REAL GDP UP BY 7.5% IN 2023, WHILE INFLATION HAS FALLEN BELOW THE TARGET PRELIMINARY ECONOMIC GROWTH STANDS AT 7.5% Y-O-Y IN 2023, FOLLOWING TWO ANNUAL INFLATION STANDING BELOW THE 3% TARGET SINCE APRIL YEARS OF DOUBLE-DIGIT EXPANSION (10.6% AND 11.0% IN 2021-2022, RESPECTIVELY) 2023, WITH JANUARY 2
Slide 8: Improved External Position
IMPROVED EXTERNAL POSITION TOTAL FX INFLOWS INCREASED BY 6.4% Y-O-Y AND AMOUNTED US$ 14.3 BLN IN 2023 CURRENT ACCOUNT DEFICIT HAS NARROWED SIGNIFICANTLY AS FDI CONTINUES TO FULLY FINANCE THE DEFICIT Export of goods Money Transfers Tourism revenues Total FX Inflows Goods, net Services, net Investment
Slide 9: Appropriate Macro Policy Stance
APPROPRIATE MACRO POLICY STANCE INFLATION Y-O-Y VS. INFLATION TARGET GENERAL GOVERNMENT DEBT (% OF GDP) 16 Headline Inflation Core Inflation Target Monetary Policy Rate General Government Debt, External (% of GDP) General Government Debt, Total (% of GDP) 12 60.2% 60% 9.0 8 50% 47.6% 41.8% 4 39.5% 3
Slide 10: Unlocking New Long-Term Opportunities: EU Candidacy and the Middle Corridor
UNLOCKING NEW LONG-TERM OPPORTUNITIES: GEORGIA’S EU CANDIDACY AND THE RISING SIGNIFICANCE OF THE MIDDLE CORRIDOR RE-EXPORT INCREASED BY 75% Y-O-Y IN 2023 AND BY 196% COMPARED TO 2021, KEY MILESTONES IN EU-GEORGIA RELATIONS PRIMARILY DUE TO THE INCREASED RE-EXPORT OF MOTOR CARS Motor cars Cigars and
Slide 11: Macroeconomic Wrap-Up
STRONG GDP PERFORMACE BELOW-TARGET INFLATION ROBUST EXTERNAL BALANCE SHEET GEL/US$ ABOVE THE PRE-PANDEMIC LEVELS MACROECONOMIC WRAP-UP SOUND MACROECONOMIC FRAMEWORK EU CANDIDACY & MIDDLE CORRIDOR: OPPORTUNITIES FOR GEORGIA 11
Slide 12: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW NAV PER SHARE DEVELOPMENT OVERVIEW UPDATE ON DELEVERAGING 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP
Slide 13: Aggregated Revenue Development Across Private Portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED REVENUE UP 7.9% AND 9.1% Y-O-Y IN 4Q23 +9.1% AND FY23, RESPECTIVELY 2,074 1,901 +7.9% 573 484 542 502 155 141 140 134 44 35 334 357 1,275 1,346 4Q22 4Q23 FY22 FY23 Other portfolio companies Other portfolio companies Inves
Slide 14: Aggregated EBITDA Development Across Private Portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION +1.8% AGGREGATED EBITDA DOWN 6.1% Y-O-Y IN 4Q23 AND UP 1.8% Y-O-Y IN FY23 243 248 35 44 ➢ 4Q23 and FY23 performance reflects a -6.1% 52 55 number of regulatory changes, particularly within the healthcare sector, which in the short-te
Slide 15: 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) -34.3% 206 -11.5% 31-Dec-22 310 -33.2% 135 +4.9% 53 30-Sep-23 262 35 31-Dec-23 275 4Q22 4Q23
Slide 16: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW NAV PER SHARE DEVELOPMENT OVERVIEW UPDATE ON DELEVERAGING 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP
Slide 17: NAV per Share (GEL) Movement in 4Q23
NAV PER SHARE (GEL) MOVEMENT IN 4Q23 +5.1% +1.9% +0.9% -0.3% +0.1% +7.7% NAV PER SHARE (GEL) UP 7.7% Q-O-Q TO 82.94 ▪ NAV per share (GEL) performance in 4Q23 mainly reflects the strong value creation across our portfolio companies, supported by the accretive impact of share buybacks. ▪ In GBP terms,
Slide 18: Strong NAV per Share Growth
STRONG NAV PER SHARE GROWTH STRONG NAV PER SHARE (GEL) GROWTH NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW WITH 13.4% CAGR SINCE DEC-18 +13.4% CAGR IN US$ AND GBP TERMS, NAV PER SHARE CAGR STANDS AT 13.2% +26.5% 82.9 63.0 65.6 46.8 48.1 44.3 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 18
Slide 19: Share Buyback and Cancellation Programme
SHARE BUYBACK AND CANCELLATION PROGRAMME DEVELOPMENT OF GCAP’S SHARE BUYBACK AND CANCELLATION PROGRAMMES 7.9 MILLION SHARES (US$ 86 Number of issued shares MILLION IN VALUE) REPURCHASED 39.4 40.2 47.92 47.1 44.8 43.2 42.7 AND CANCELLED SINCE DEMERGER IN 2018, REPRESENTING 16.5%1 OF THE $86 ISSUED SH
Slide 20: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW NAV PER SHARE DEVELOPMENT OVERVIEW UPDATE ON DELEVERAGING 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP
Slide 21: Net Capital Commitment (NCC) Overview
NET CAPITAL COMMITMENT (NCC) OVERVIEW Change Change US$ Million 31-Dec-22 30-Sep-23 31-Dec-23 (y-o-y) (q-o-q) NCC RATIO IMPROVED BY 0.3 PPTS Cash and liquid funds 152.4 -73.7% 37.5 7.1% 40.1 Q-O-Q AND 5.5 PPTS Y-O-Y TO Loans issued 9.9 -65.5% 3.3 3.0% 3.4 15.6% AS AT 31-DEC-23 Gross debt (303.3) -49
Slide 22: 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 debt and guarantees issued” clos
Slide 23: Free Cash Flow Development
FREE CASH FLOW DEVELOPMENT GCAP’s FREE CASH FLOW DEVELOPMENT (US$ MILLION) SIGNIFICANT INCREASE IN FREE CASH FLOW, REFLECTING ROBUST DIVIDEND INFLOWS, WELL-MANAGED OPERATING EXPENSES, AND REDUCED INTEREST EXPENSE IN LINE WITH OUR DELEVERAGING PROGRESS Free cash flow is determined by subtracting inte
Slide 24: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 24
Slide 25: Portfolio Value as of 31-Dec-23
PORTFOLIO VALUE AS OF 31-DEC-23 % SHARE IN TOTAL PORTFOLIO VALUE: 78% OF OUR PORTFOLIO 92% IS OF OUR PORTFOLIO 33% 4% 19% 10% 9% 7% 5% 3% 8% ISVALUED VALUED EXTERNALLY EXTERNALLY1 1 GBP 39.75 OPTION MULTIPLE: 13.0x-11.0x 13.8x 12.6x 16.7x 11.7x BGEO VALUATION2 9.7x LTM P/E4 LTM EV/EBITDA3 EV/EBITDA5
Slide 26: Portfolio Value Development in 4Q23
PORTFOLIO VALUE DEVELOPMENT IN 4Q23 PORTFOLIO VALUE UP 5.5% TO GEL 3.7 BILLION IN 4Q23 PRIVATE PORTFOLIO VALUE CREATION IN 4Q23 LISTED AND OBSERVABLE PORTFOLIO PRIVATE PORTFOLIO VALUE PRIVATE PORTFOLIO VALUE CREATION VALUE UP BY 10.7% UP BY 2.7% GEL MILLION GEL million Insurance (P&C & Medical) 42.4
Slide 27: Retail (Pharmacy) Business Operating Performance Overview
RETAIL (PHARMACY) BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT RETAIL (PHARMACY) +4.3% KEY DRIVERS 824 790 +0.5% ▪ The y-o-y increase in revenues reflects: o Increased sales of higher-margin para-pharmacy GEL MILLION +6.9% products o the expansion of the pharmacy c
Slide 28: Retail (Pharmacy) Business Valuation Overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q23 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q +3.7% +1.0% -4.6% +5.1% 9.7x 9.1x 30-Sep-23 31-Dec-23 VALUATION HIGHLIGHTS1 Y-O-Y PROGRESS ADJUSTED NET DEBT TO EBITDA2 (excl. IFRS 16) GEL
Slide 29: Hospitals Business Operating Performance Overview
HOSPITALS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT1 EBITDA2 DEVELOPMENT +0.2% HOSPITALS 315 315 -18.7% 57 KEY DRIVERS 116 111 ▪ To address the oversupply of beds and 46 GEL MILLION enhance the quality of the healthcare industry 21 in Georgia, the government introduced new -1.4% 12
Slide 30: Hospitals Business Valuation Overview
Externally valued1 HOSPITALS BUSINESS VALUATION OVERVIEW 13.8x VALUE DEVELOPMENT OVERVIEW (GEL MILLION) IMPLIED LTM EV/EBITDA OF THE HOSPITALS BUSINESS VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA3 (excl. IFRS 16) GEL million, unless noted otherwise 31-Dec-232 30-Sep-232 31-Dec-222 5.3x4 4.4x Enterprise
Slide 31: Insurance Business Operating Performance Overview
INSURANCE BUSINESS OPERATING PERFORMANCE OVERVIEW INSURANCE REVENUE NET INCOME DEVELOPMENT +21.4% 208 +3.1% INSURANCE 172 25 26 KEY DRIVERS 91 P&C Insurance 3 7 75 GEL MILLION ▪ The increase in insurance revenue is mainly +22.5% driven by the growth in the motor and credit life +3.7% insurance lines
Slide 32: P&C Insurance Business Valuation Overview
Externally valued1 P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q23 IMPLIED LTM P/E MULTIPLE (GEL MILLION) DEVELOPMENT Change q-o-q +6.6% 13.0x 11.8x 30-Sep-23 31-Dec-23 VALUATION HIGHLIGHTS1 Y-O-Y PROGRESS NET DEBT TO EBITDA GEL million, unless noted otherwise 31-Dec-23 3
Slide 33: Renewable Energy Business Operating Performance Overview
RENEWABLE ENERGY BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT -0.9% RENEWABLE ENERGY -7.1% 15 14 11 KEY DRIVERS 10 +5.3% ▪ A y-o-y increase in the 4Q23 revenue and EBITDA reflect the net impact of: US$ MILLION 6 6 +4.7% o a 7.8% y-o-y increase in electricity +6.6% g
Slide 34: Renewable Energy Business Valuation Overview
Externally valued1 RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q23 EQUITY FAIR VALUE COMPOSITION (US$ MILLION) AT 31-DEC-23 (US$ MILLION) Change q-o-q +0.3% -1.6% +1.8% 21 Total value US$ 99 78 Operational assets Pipeline projects VALUATION HIGHLIGHTS1 Y-O-Y PROGRESS N
Slide 35: Education Business Operating Performance Overview
EDUCATION BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT EDUCATION +30.3% +6.0% 55 KEY DRIVERS GEL MILLION ▪ The increase in revenue was driven by: 43 o The organic growth through strong intakes +41.5% 14 and a ramp-up of the utilization; and 14 o expansion of the bus
Slide 36: Education Business Valuation Overview
Externally valued1 EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q23 LTM EV/EBITDA DEVELOPMENT4 (GEL MILLION) Change q-o-q +11.4% +6.8% +27.6% +6.9% +10.8% 16.5x 16.7x 30-Sep-23 31-Dec-23 2 Y-O-Y PROGRESS NET DEBT TO EBITDA VALUATION HIGHLIGHTS1 GEL million, unless noted otherw
Slide 37: Clinics & Diagnostics Business Operating Performance Overview
CLINICS & DIAGNOSTICS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT1 EBITDA2 DEVELOPMENT +9.7% CLINICS & DIAGNOSTICS 68 +129.9% 62 KEY DRIVERS 18 ▪ The growth in revenue and EBITDA reflects the 20 GEL MILLION increased demand for non-COVID services and 13 +27.0% 49 NMF the expansion of
Slide 38: Clinics & Diagnostics Business Valuation Overview
Externally valued1 CLINICS & DIAGNOSTICS BUSINESS VALUATION OVERVIEW 11.7x VALUE DEVELOPMENT OVERVIEW (GEL MILLION) IMPLIED LTM EV/EBITDA VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA3 (excl. IFRS 16) GEL million, unless noted otherwise 31-Dec-232 30-Sep-232 31-Dec-222 4.5x 4 Enterprise value 171.8 176.9
Slide 39: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 39
Slide 40: Liquidity Outlook
LIQUIDITY OUTLOOK LIQUIDITY DEVELOPMENT OVERVIEW (US$ MILLION) GROSS DEBT (US$ million) *LIQUIDITY UP BY 7.1% Q-O-Q IN 4Q23, REFLECTING 300 300 365 365 300 150 150 THE NET EFFECT OF DIVIDEND INFLOWS AND SHARE BUYBACKS DURING THE QUARTER Cash receipt from the Cancellation of US$ 65 **LIQUIDITY DOWN B
Slide 41: Dividend Income Outlook
DIVIDEND INCOME OUTLOOK CASH DIVIDEND INCOME FROM PORTFOLIO COMPANIES GEL 236 MILLION DIVIDEND INCOME IN FY23 DIVIDENDS INCOME RECURRING ONE-OFF TOTAL +2.5x (GEL million) BOG 124.5 29.4 153.9 236 Of which, cash dividends 80.5 - 80.5 GEL MILLION Of which, buyback dividends 44.0 29.4 73.4 73 Retail (P
Slide 42: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 42
Slide 43: Solid Performance Across Our Portfolio
SOLID PERFORMANCE ACROSS OUR PORTFOLIO PERFORMANCE HIGHLIGHTS NAV per share (GEL) up 7.7% q-o-q to GEL 82.94 (GBP 24.23), reflecting strong value creation across our portfolio companies. NAV per share ✓ (GEL) was up 26.5% y-o-y in FY23. NCC ratio improved by 0.3 ppts q-o-q to 15.6% as at 31-Dec-23 (
Slide 44: Contents
CONTENTS 01 KEY DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 4Q23 & FY23 PERFORMANCE OVERVIEW 04 4Q23 & FY23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 44
Slide 45: Deleveraging Across Our Private Portfolio
DELEVERAGING ACROSS OUR PRIVATE PORTFOLIO TARGET AGGREGATED LEVERAGE ADJUSTED NET DEBT/EBITDA 30-SEP-23 CHANGE 31-DEC-23 (OVER THE CYCLE) ACROSS OUR PRIVATE LARGE AND INVESTMENT STAGE LARGE PORTFOLIO COMPANIES PORTFOLIO COMPANIES AT Retail (pharmacy)1 2.3x -0.1x 2.2x Up to 1.5x 3.1x AS OF 31-DEC-23
Slide 46: Private Portfolio Companies' Debt Maturity Profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 31 DECEMBER 2023 (GEL MILLION) 2024 2025 2026 2027-2036 Total Large portfolio companies 332.9 55.0 53.9 46.4 488.2 Retail (pharmacy)1 168.8 27.2 27.2 13.6 236.8 Hospitals 164.1 27.8 26.7 32.8 251.4 Investment stage portfoli
Slide 47: Valuation Peer Group
VALUATION PEER GROUP RETAIL P&C (PHARMACY) HOSPITALS INSURANCE • NEUCA S.A. | Poland • Medicover AB | Sweden • Dhipaya Insurance | Thailand • Sopharma Trading AD | Bulgaria • EMC Instytut Medyczny SAEMC SA | Poland • Zavarovalnica Triglav | Slovenia • S.C. Ropharma S.A. | Romania • Med Life S.A. | R
Slide 48: 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