Georgia Capital PLC · LSE:CGEO
Georgia Capital — Q1 2021 Earnings Presentation
95 slides from Georgia Capital's earnings presentation, May 18, 2021
Slide 1: Investor Presentation 1Q21 results
INVESTOR PRESENTATION 1Q21 results 18 May 2021
Slide 2: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES 2
Slide 3: COVID-19 statistics
COVID-19 STATISTICS COVID-19 CASES: DYNAMICS IN GEORGIA 3.1% OF TOTAL ADULT POPULATION HAS BEEN VACCINATED ECONOMY NEARING FULL REOPENING AS AT 16-MAY-21 350 6 Total cases (LHS) Daily cases (RHS) 27% 300 5 TOTAL NUMBER 41% AstraZeneca 250 OF VACCINATED PEOPLE 4 Pfizer-BioNTech 200 88,522 Thousand 3
Slide 4: Macroeconomic indicators in 2021
MACROECONOMIC INDICATORS IN 2021 RECORD HIGH REMITTANCES AND REBOUNDING MERCHANDISE REAL GDP GREW BY 4% IN MARCH 2021 ON THE BACK OF LIGHTER EXPORTS SUPPORTING RECOVERY RESTRICTIONS AND THE BASE EFFECT 2021 2021 Remittances, USD million (RHS) Remittances, y/y (LHS) 30% Real GDP, y/y VAT Turnover, y/
Slide 5: Government measures
GOVERNMENT MEASURES ACCUMULATED BUFFERS AND INTERNATIONAL SUPPORT HAVE ALLOWED THE GOVERNMENT TO LAUNCH SIZEABLE MEASURES US$ 3 billion funding facility Economic Plan – US$ 3 billion (predominantly loans) from international Budget – GEL 3.5 billion (1st stage) Budget – GEL 1.1 billion (2nd stage) do
Slide 6: Labor market dynamics
LABOR MARKET DYNAMICS IN 2020 THE UNEMPLOYMENT RATE INCREASED TO 20.4% DUE TO NOMINAL WAGES IN THE BUSINESS SECTOR GREW BY 0.9% IN 2ND SET OF RESTRICTIONS 4Q20, FOLLOWING A SHARP DECLINE IN 2Q20 Wages, total Growth rate (RHS) 15% 13.2% 12.9% 1450 Employed Unemployment % 30 27.2 27.2 26.7 10.9% 26.4
Slide 7: Exchange rate performance
EXCHANGE RATE PERFORMANCE OFFICIAL RESERVE ASSETS REACHED A HISTORIC HIGH OF US$ 4.1 THE REAL EFFECTIVE EXCHANGE RATE HAS DEVIATED FROM BILLION BY THE END OF MARCH 2021, UP 20.6% Y-O-Y THE LONG-TERM TREND FOR MORE THAN TWO YEARS 4,000 Official Reserve Assets, US$ mln Net Foreign Assets, US$ mln REER
Slide 8: Fiscal expenses remain substantial as revenue plans met
FISCAL EXPENSES REMAIN SUBSTANTIAL AS REVENUE PLANS MET THE TAX REVENUE PLAN WAS MET IN 1Q21, WITH REVENUES AMOUNTING TO TOTAL EXPENSES (CURRENT + CAPITAL) GREW BY 14% Y-O-Y IN 1Q21, 100.3% OF THE PLAN WHILE CAPITAL EXPENSES AMOUNTING TO 106% OF THE PLAN Consolidated Budget Tax Revenues (2020 vs 202
Slide 9: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES 9
Slide 10: Georgia Capital shareholders at 31-Mar-21
GEORGIA CAPITAL (GCAP) SHAREHOLDERS AT 31-MAR-21 GCAP SHAREHOLDERS ALLOCATION BY GEOGRAPHY GCAP TOP 10 SHAREHOLDERS Rank Shareholder name Ownership Other 1 5.95% Eaton Vance 20.0% 2 M&G Investment Management Ltd 5.65% 3 Schroder Investment Management Ltd 4.44% 4 RWC 3.13% 2 UK 5 2.76% Coeli Frontier
Slide 11: Our portfolio overview
OUR PORTFOLIO OVERVIEW LISTED ASSETS PRIVATE ASSETS INVESTMENT STAGE PORTFOLIO LISTED ASSETS LARGE PORTFOLIO COMPANIES COMPANIES OTHER ASSETS • Housing Development • Bank of Georgia (BoG) • Healthcare Services (GHG) • Renewable Energy • Hospitality & • Retail (pharmacy) (GHG) • Education Commercial
Slide 12: Our private portfolio at a glance
OUR PRIVATE PORTFOLIO AT A GLANCE DEFENSIVE, HIGH QUALITY ASSETS WITH STRONG AND GROWING CASH FLOW STREAMS EXPECTED TO CLOSE TO GEL STRONG CASH FLOW DOMINANT MARKET BECOME GEL 0.5BLN+ NON-CYCLICAL 0.5BLN+ VALUE GENERATION POSITION IN VALUE Healthcare Services ✓ ✓ ✓ ✓ LARGE PORTFOLIO Retail COMPANIES
Slide 13: Portfolio highlights | March 2021
PORTFOLIO HIGHLIGHTS | 31 MARCH 2021 Gross investment of GEL 1.5b Net investment of GEL 575m Portfolio fair value of GEL 2.9b Listed assets Large portfolio companies Investment stage portfolio companies Original 129 390 11 147 63 216 investment MOIC1 7.2 3.4 2.6 23.5 1.5 1.6 1,209 GEL million 505 45
Slide 14: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES 14
Slide 15: Core strategy enablers
CORE STRATEGY ENABLERS THREE FUNDAMENTAL ENABLERS: 01 Superior corporate governance THREE FUNDAMENTAL ENABLERS 02 Access to management 03 Access to capital STRONG ACCESS TO ACCESS TO CAPITAL CORPORATE MANAGEMENT GOVERNANCE 15
Slide 16: Capital allocation philosophy
CAPITAL ALLOCATION PHILOSOPHY WE ARE TARGETING TO INVEST IN OPPORTUNITIES WHICH GCAP SHARE PRICE IS AT CORE OF PRODUCE GREATER RETURN THAN BUYING GCAP SHARES OUR DECISION MAKING VIS-À-VIS INVESTMENTS We perform 360-degree analysis each time we make a capital allocation decision and compare: 360o • I
Slide 17: Capital allocation philosophy (cont'd)
CAPITAL ALLOCATION PHILOSOPHY (CONT’D) IRR & MOIC1 IS THE KEY DRIVER ROIC IS AT CORE OF DECISION MAKING WHEN OUR PORTFOLIO FOR GCAP TO INVEST IN NEW COMPANIES ARE INVESTING OR DIVESTING ASSETS / BUSINESSES OPPORTUNITIES KEY MONEY MULTIPLES AT GCAP LEVEL KEY METRIC FOR REINVESTMENT DECISION MAKING AT
Slide 18: Enhancement of our strategy announced on 2020 Investor Day
ENHANCEMENT OF OUR STRATEGY AS ANNOUNCED ON 2020 INVESTOR DAY We will be investing in the sectors/opportunities with potential to be GEL 0.5bln in equity value in the next 3-5 years’ time Larger companies will be attractive for international strategic and financial buyers, which will increase the li
Slide 19: Enhanced strategy is to invest in large opportunities
ENHANCED STRATEGY IS TO INVEST IN LARGE OPPORTUNITIES GCAP invests in Georgia in large opportunities, which have a MONETISE potential to become GEL 0.5bln+ in equity value. GCAP develops and grows portfolio companies to equity value of GEL 0.5bln+ and realizes proceeds through exit, as investments m
Slide 20: New priority #1: realizing value of one large investment
NEW PRIORITY #1 ANNOUNCED ON 2020 INVESTOR DAY: REALIZING VALUE OF ONE LARGE INVESTMENT We believe realizing value of one of our large investments will help to validate the value of our portfolio and to reduce discount to NAV Realizing value of Reduce NAV one large investment discount Therefore, we
Slide 21: New priority #2: divestment of other portfolio
NEW PRIORITY #2: DIVESTMENT OF “OTHER” PORTFOLIO Other portfolio includes small companies with limited potential to achieve GEL 0.5 billion equity value SUBJECT TO 360o ANALYSIS “OTHER” PORTFOLIO EXPECTED TO BE DIVESTED IN THE NEXT 2-3 YEARS 21
Slide 22: Renewable energy and education key investment areas
RENEWABLE ENERGY AND EDUCATION - OUR KEY INVESTMENT AREAS IN THE MEDIUM TERM GRADUALLY MOVING TO TOTAL NET INVESTMENT OF c. US$ 50MLN IDENTIFIED REINVESTMENT PHASE, FROM GCAP OVER THE NEXT 3-5 YEARS1 GIVEN THE STRONG CASH FLOW GENERATION AT OUR INVESTMENT STAGE of which, in 2021 PORTFOLIO COMPANIES
Slide 23: Investing in renewable energy
INVESTING IN RENEWABLE ENERGY INDUSTRY INVESTMENT RATIONALE TOTAL NET INVESTMENT OF c. US$ 36MLN IDENTIFIED FROM GCAP OVER THE NEXT 3 YEARS2 ▪ High margins, dollar linked cash flows ▪ Over the next 3 years we will be launching pipeline projects: wind farms in ▪ Growing market, with 35% of demand sat
Slide 24: Investing in education
INVESTING IN EDUCATION INDUSTRY INVESTMENT RATIONALE TOTAL NET INVESTMENT OF c. US$ 14MLN IDENTIFIED FROM GCAP OVER ▪ Asset light industry THE NEXT 5 YEARS BY 20252 ▪ High quality revenue with high margins ▪ Scaling up to capacity of 21,000 learners through expansion plans in existing schools and M&
Slide 25: Outlook for our private portfolio in line with enhanced strategy
OUTLOOK FOR OUR PRIVATE PORTFOLIO IN LINE WITH ENHANCED STRATEGY New Strategic New Strategic Priority #1 Priority #2 LARGE PORTFOLIO INVESTMENT STAGE PORTFOLIO SMALL COMPANIES COMPANIES COMPANIES (“OTHER ASSETS”) Exit from one large investment Total identified investment of US$ Divestment over the n
Slide 26: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES 26
Slide 27: US$65 million Eurobond tap issue in March 2021
US$ 65 MILLION EUROBOND TAP ISSUE IN MARCH 2021 OUR STRONG LIQUIDITY HAS BEEN FURTHER ENHANCED, UP 64.4% TO GEL 467 MILLION IN 1Q21 TOTAL ISSUE USE OF PROCEEDS C.$30 US$ 65 C.$35 ➢ US$ c.35 million will be used to fund capital allocations to our portfolio companies ▪ On 9-Mar-21, JSC Georgia Capital
Slide 28: NAV per share development overview
NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW NAV PER SHARE DOWN 2.7% TO GEL 46.80 IN 1Q21 CONTROLLABLE (PRIVATE) NAV PER SHARE DOWN 1.6% TO GEL 38.71 IN 1Q21 % Change q-o-q -35.6% +4.9% +19.5% +27.2% -2.7% % Change q-o-q -25.0% -0.5% +69.3% +22.1% -1.6% 46.84 48.12 46.80 GEL 39.32 38.71 GEL 37.84 31.67
Slide 29: NAV per share movement in 1Q21
NAV PER SHARE (GEL) MOVEMENT IN 1Q21 NAV PER SHARE CHANGE % -1.2% +0.5% +0.2% +0.9% +0.1% -0.4% -2.8% -2.7% NAV PER SHARE DOWN 2.7% • 2.7% decline in 1Q21 NAV per share (GEL) mainly reflects a 4.0% GEL depreciation against USD and a 9.8% decrease in BoG share price, partially offset by the value cre
Slide 30: Aggregated revenue development across private portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO +3.9% AGGREGATED 1,657 REVENUE UP 8.3% 1,595 Y-O-Y IN 1Q21 AND 331 UP 30.7% FROM 1Q19 307 42 68 GEL MILLION ▪ LTM 1Q21 aggregated +30.7% revenue up 3.9% y-o-y +8.3% 426 393 326 75 65 38 14 14 288 314 337 1,246 1,258 1Q19 1Q20 1Q21 LTM 1Q20 LTM
Slide 31: Aggregated revenue across large portfolio companies
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES RESILIENT PERFORMANCE OF HEALTHCARE SERVICES, NET 1Q21 REVENUE OF RETAIL (PHARMACY) REMAINED LARGELY REVENUE UP 23.3% Y-O-Y IN 1Q21. LTM 1Q21 NET REVENUE FLAT (DOWN 0.7% Y-O-Y). LTM 1Q21 REVENUE UP 5.3% Y-O-Y UP 3.8% Y-O-Y +3.8%
Slide 32: Aggregated revenue across large portfolio companies (cont'd)
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) REVENUE OF WATER UTILITY UP 22.2% Y-O-Y IN 1Q21, TOTAL GROSS PREMIUMS WRITTEN OF P&C AND REFLECTING THE IMPACT OF INCREASED TARIFFS1 SINCE JAN-21 MEDICAL INSURANCE UP 21.6% Y-O-Y IN 1Q21 REFLECTING THE REBOUNDING DEMAND
Slide 33: Aggregated revenue across investment stage portfolio companies
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE INVESTMENT STAGE PORTFOLIO COMPANIES 1Q21 REVENUE DOWN BY 1.6% Y-O-Y, REFLECTING 5.6% EDUCATION REVENUE DOWN 3.4% Y-O-Y IN 1Q21 REFLECTING Y-O-Y DECREASE IN TOTAL ELECTRICITY GENERATIONS A DECREASE IN THE NUMBER OF ACADEMIC DAYS +86.3% +35.4% 42.5 25.5 G
Slide 34: Aggregated EBITDA development across private portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO +6.3% 307 AGGREGATED EBITDA 289 UP 25.3% Y-O-Y IN 9 40 1Q21 AND UP 45.9% 25 FROM 1Q19 39 GEL MILLION ▪ LTM 1Q21 aggregated +45.9% EBITDA up 6.3% y-o-y +25.3% 77 61 9 53 1 6 8 57 53 62 255 228 (4) 1Q19 1Q20 1Q21 LTM 1Q20 LTM 1Q21 Large portfolio
Slide 35: Aggregated cash balance and net operating cash flow
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) +90% 31-Dec-19 183 +12% 318 284 -11% 31-Dec-20 392 31-Mar-21 347 -65% 90 31 GCAP LIQUIDITY A
Slide 36: Georgia Capital leverage and liquidity profile
GEORGIA CAPITAL LEVERAGE & LIQUIDITY PROFILE LTV RATIO1 IS ON TRACK TO THE TARGETED THRESHOLD OF <30% US$ 137 MILLION LIQUID FUNDS AS OF 31-MAR-21 44.1% 41.9% Cash Pre-COVID average: 22% 38 33.5% TOTAL 30% 28.9% 31.2% Marketable 137 27.9% 25.8% securities 20.0% 19.2% US$ MILLION 17.6% Loans issued 1
Slide 37: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES 37
Slide 38: Portfolio value development in 1Q21
PORTFOLIO VALUE DEVELOPMENT IN 1Q21 PORTFOLIO VALUE UP 0.5% TO GEL 2.92 BILLION IN 1Q21 % SHARE OF LISTED ASSETS 18% 17% GEL MILLION 38
Slide 39: Portfolio value as of 31-Mar-21
PORTFOLIO VALUE AS OF 31-MAR-21 % SHARE IN TOTAL PORTFOLIO VALUE: 17% 21% 18% 16% 9% 7% 4% 8% 81% OF OUR PORTFOLIO IS MULTIPLE: BGEO 12.5X 9.5X 9.6X 11.4X – 9.8X 9.7X 12.5X VALUED EXTERNALLY1 PRICE ON LSE GBP 11.00 LTM EV/EBITDA2 LTM EV/EBITDA2 LTM EV/EBITDA3 LTM P/E4 EV/EBITDA5 LTM EV/EBITDA (ON A
Slide 40: Bank of Georgia overview
Listed portfolio BANK OF GEORGIA OVERVIEW http://bankofgeorgiagroup.com/ INVESTMENT RATIONALE Market opportunity ▪ The first entity from Georgia to be listed on the premium segment of the Main Market of the London Stock Exchange (LSE: BGEO) since February 2012. Banking sector assets, loans and depos
Slide 41: Bank of Georgia overview
Listed portfolio BANK OF GEORGIA OVERVIEW http://bankofgeorgiagroup.com/ Stock price Stock price performance performance Financial metrics (GEL million) 40.00 35.00 GBP 11.00 30.00 2015 2016 2017 2018 2019 2020 1Q20 1Q21 Change as of 31-Mar-21 25.00 NIM 7.7% 7.4% 7.3% 6.5% 5.6% 4.6% 5.0% 4.5% -0.5pp
Slide 42: Georgian healthcare market overview
Private large portfolio companies EXTERNALLY VALUED GEORGIAN HEALTHCARE MARKET OVERVIEW GROWTH IN HEALTHCARE SERVICES MARKET EXPECTED TO CONTINUE STATE HEALTHCARE BUDGET IS INCREASING FOR THE LAST SEVERAL YEARS Double digit growth on the back of favorable dynamics expected State healthcare spending
Slide 43: GHG at a glance
Private large portfolio companies EXTERNALLY VALUED GHG AT A GLANCE A well diversified business model with cost and synergy advantages Georgia Healthcare Group – The only fully integrated healthcare provider in the region Extensive geographic coverage - diversified healthcare services and with solid
Slide 44: GHG's track record of delivering strong results
Private large portfolio companies EXTERNALLY VALUED GHG’S TRACK RECORD OF DELIVERING STRONG RESULTS REVENUE, GROSS (GEL MILLION) EBITDA1 (GEL MILLION) OPERATING CASH FLOW1 (GEL MILLION) EBITDA to cash conversion ratio2: 81% 54% 54% 75% 84% 112% 119% 5% 975.4 920.3 849.9 747.8 300 250 +6.3% -95.1% 42
Slide 45: Healthcare services business overview
Private large portfolio companies EXTERNALLY VALUED HEALTHCARE SERVICES BUSINESS OVERVIEW The largest healthcare service provider in Georgia: c. 20% market share by number of MAJOR GROWTH DRIVERS referral hospitals and community clinics beds – 2,949 Market share by number of beds1 Referral hospitals
Slide 46: Healthcare services business overview (cont'd)
Private large portfolio companies EXTERNALLY VALUED HEALTHCARE SERVICES BUSINESS OVERVIEW (CONT’D) HOSPITALS CLINICS Bed occupancy rate 17 19 15 Average 4.9 5.2 5.5 5.4 5.2 5.6 5.3 5.9 Number of referral hospitals Number of community clinics Number of polyclinics length of stay -3.3ppts -2.3ppts 2,5
Slide 47: Healthcare services business valuation overview
Externally valued1 HEALTHCARE SERVICES BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q21 IMPLIED LTM EV/EBITDA (GEL MILLION) DEVELOPMENT (incl. IFRS 16) Change q-o-q +7.4% +11.7% +4.1% +5.8% 13.2x 12.5x 2 31-Dec-20 31-Mar-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 31-Mar
Slide 48: Retail (pharmacy) business overview
Private large portfolio companies EXTERNALLY VALUED RETAIL (PHARMACY) BUSINESS OVERVIEW Country’s largest retailer in terms of both, revenue and number of bills issued BUSINESSES MAJOR GROWTH DRIVERS Market share by revenue, 20181 › Expending retail footprint GHG in pharma 519 32% › Enhancing retail
Slide 49: Retail (pharmacy) business overview (cont'd)
Private large portfolio companies EXTERNALLY VALUED RETAIL (PHARMACY) BUSINESS OVERVIEW (CONT’D) REVENUE AVERAGE BILL SIZE & NUMBER OF BILLS ISSUED Margin enhancement and strong Gross profit margin (%) Number of bills issued, million growth in para-pharmacy sales 24.5% 25.5% 25.5% 25.4% 25.9% 23.2%
Slide 50: Retail (pharmacy) business valuation overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q21 IMPLIED LTM EV/EBITDA (GEL MILLION) DEVELOPMENT (incl. IFRS 16) Change q-o-q -0.4% +8.3% +2.3% -3.1% 9.5x 9.1x 31-Dec-20 31-Mar-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 31-Mar-21 31-
Slide 51: Medical insurance business overview
Private large portfolio companies EXTERNALLY VALUED MEDICAL INSURANCE BUSINESS OVERVIEW Largest medical insurer in the country with 25.0%1 market share Offering a variety of medical insurance products, with a wide distribution network to the Georgian population BUSINESSES MAJOR GROWTH DRIVERS Market
Slide 52: Medical insurance business overview (cont'd)
Private large portfolio companies EXTERNALLY VALUED MEDICAL INSURANCE BUSINESS OVERVIEW (CONT’D) NUMBER OF INSURED & RENEWAL RATE REVENUE (NET INSURANCE PREMIUMS EARNED) Retention rate within the Group (%) 19.2% 23.3% 34.7% 39.4% 37.4% 37.3% 40.0% 35.9% -7.8% 75.1% 73.4% 76.9% 77.5% 73.4% 90 400 69.
Slide 53: Medical insurance business valuation overview
Externally valued1 MEDICAL INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q21 IMPLIED LTM P/E MULTIPLE (GEL MILLION) DEVELOPMENT Change q-o-q +6.7% +6.2% +5.6% 10.1x 9.8x 31-Dec-20 31-Mar-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 31-Mar-21 31-Dec-20 Change Comb
Slide 54: P&C insurance business overview
Private large portfolio companies EXTERNALLY VALUED P&C INSURANCE BUSINESS OVERVIEW MARKET & ALDAGI GROSS PREMIUMS WRITTEN1 MARKET SHARE FY20 (GROSS PREMIUMS WRITTEN) (GEL MILLION) INVESTMENT RATIONALE 370 380 • Significantly underpenetrated insurance market in Georgia 400 308 (0.8% penetration in p
Slide 55: P&C insurance business overview
Private large portfolio companies EXTERNALLY VALUED P&C INSURANCE BUSINESS OVERVIEW COMBINED RATIO 1Q21 Financial Highlights -0.6ppts -3.6ppts 87.5% 83.9% 82.1% 81.5% GEL 26.9m GEL 7.3m 73.9% 77.5% 72.6% 75.2% 75.4% +18.8% y-o-y -19.0% y-o-y 41.6% 44.0% 48.7% Earned premiums gross Cash flow from ope
Slide 56: P&C insurance business valuation overview
Externally valued1 P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q21 IMPLIED LTM P/E (GEL MILLION) MULTIPLE DEVELOPMENT Change q-o-q NMF NMF NMF +3.4% 11.6x 11.4x 31-Dec-20 31-Mar-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 31-Mar-21 31-Dec-20 Change Combina
Slide 57: Water utility business overview
Private large portfolio companies EXTERNALLY VALUED WATER UTILITY BUSINESS OVERVIEW INVESTMENT RATIONALE REGULATORY ENIVORNMENT ▪ Regulated monopoly in Tbilisi and surrounding districts with high entry barriers. ▪ Stable regulatory environment with attractive return on investment. TARIFF DERIVATION
Slide 58: Water utility business overview (cont'd)
Private large portfolio companies EXTERNALLY VALUED WATER UTILITY BUSINESS OVERVIEW (CONT’D) 1Q21 OPERATING HIGHLIGHTS REVENUE HIGHLIGHTS EBITDA Total 123 119 127 135 149 163 131 31 38 95 Energy 20 83 4.1 million KWh 9.9 Tetri/KWh 9 73 +32.4% 10 6 69 GEL million 10 +22.2% 63 GEL million 6 9 62 -70.3
Slide 59: Water utility business valuation overview
Externally valued1 WATER UTILITY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q21 (GEL MILLION) IMPLIED LTM EV/EBITDA Change q-o-q MULTIPLE DEVELOPMENT +1.8% +6.8% -3.0% 9.6x 9.4x 31-Dec-20 31-Mar-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 31-Mar-21 31-Dec-20 Change Com
Slide 60: Renewable energy business overview
Private investment stage portfolio companies INTERNALY VALUED RENEWABLE ENERGY BUSINESS OVERVIEW INVESTMENT RATIONALE MARKET OPPORTUNITY ▪ Growth in electricity consumption has been 6.5x more in TWhs than growth in electricity supply during last 10 years. ELECTRICITY SUPPLY AND CONSUMPTION (TWH), 20
Slide 61: Renewable energy business overview (cont'd)
Private investment stage portfolio companies INTERNALY VALUED RENEWABLE ENERGY BUSINESS OVERVIEW (CONT’D) 1Q21 PERFORMANCE RENEWABLE ENERGY PROJECTS OVERVIEW | 31 March 2021 Generation (GWh) Actual/ Gross 0.9 1.3 9.2 10.6 23.4 19.8 Commissioned Installed capacity Target PPA PPA tariff, capacity fact
Slide 62: Renewable energy business valuation overview
Internally valued RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q21 EQUITY FAIR VALUE (GEL MILLION) COMPOSITION AT Change q-o-q +3.8% 7.9% -1.6% 31-MAR-21 (GEL MILLION) 43 Total value 207 164 Operational assets Pipeline projects VALUATION HIGHLIGHTS GEL million, unless n
Slide 63: Education business overview
Private investment stage portfolio companies INTERNALLY VALUED EDUCATION BUSINES OVERVIEW INDUSTRY INVESTMENT RATIONALE STRONG PLATFORM TO FACILITATE GROWTH AND SCALE TO BECOME THE LEADING EDUCATION PLAYER WITH c. 21,000 LEARNERS BY 2025 ▪ Highly fragmented general education market with consolidatio
Slide 64: Education business overview (cont'd)
Private investment stage portfolio companies INTERNALLY VALUED EDUCATION BUSINESS OVERVIEW (CONT’D) 1Q21 Operating highlights PRIVATE K-12 MARKET IN GEORGIA 90.9% -0.6ppts y-o-y Market growing at c.2x nominal GDP growth rate Capacity utilization Private K-12 learners in Georgia 2,554 63.2 61.9 60.8
Slide 65: Education business valuation overview
Internally valued EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q21 LTM EV/EBITDA (GEL MILLION) DEVELOPMENT Change q-o-q +3.4% +44.0% +2.4% +3.2% +10.9% 12.5x 12.5x 2 31-Dec-20 31-Mar-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 31-Mar-21 31-Dec-20 Change Valuati
Slide 66: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES 66
Slide 67: Sovereign ratings with favourable macro fundamentals
SOVEREIGN RATINGS WITH FAVOURABLE MACRO FUNDAMENTALS Key Ratings Highlights General Facts Rating Agency Rating Outlook Affirmed Ba2 Stable April 2021 BB Negative February 2021 Georgia BB Negative February 2021 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook Armeni
Slide 68: Georgia's key economic drivers
GEORGIA’S KEY ECONOMIC DRIVERS Top performer globally in WB Doing Business over the past 12 years Liberal ▪ Liberty Act (effective January 2014) ensures a credible fiscal framework; Fiscal deficit/GDP capped at 3%; Public debt/GDP capped at 60%. economic policy ▪ Following the emergency clause activ
Slide 69: Institutional oriented reforms
INSTITUTIONAL ORIENTED REFORMS Ease of Doing Business | 2020 (WB Doing Business Report) Economic Freedom Index | 2020 (Heritage Foundation) New Zealand 1 Singapore 2 Ireland 6 US 6 UK 7 Georgia 7 Georgia 12 Up by four places Norway 9 Lithuania 11 Lithuania 16 compared to 2018 Estonia 18 Czech Republ
Slide 70: Economy hit hard, but expected to bounce back fast
ECONOMY HIT HARD, BUT EXPECTED TO BOUNCE BACK FAST Gross domestic product Diversified nominal GDP structure, 2020 According to preliminary estimates, real GDP fell by 6.2% in 2020 Accommodation and food Information and Healthcare 20,000 17,189 17,625 17,597 17,422 service activities communication In
Slide 71: Signs of recovery in the labour market
SIGNS OF RECOVERY IN THE LABOUR MARKET New unemployment rate (updated methodology) equal to UNDP Human Development Index 20.4% in 4Q20, up by 3.8 pp y-o-y Sources: UNDP Sources: GeoStat 1450 27.2 27.2 26.7 26.4 30 1 0.78 0.79 0.81 0.74 0.74 0.75 0.76 0.77 0.77 0.78 23.0 21.9 25 0.8 0.72 0.73 0.73 0.
Slide 72: Inflation to stay above target in 2021
0 20 40 80 60 -40 -20 Jan-05 Jan-15 Jul-05 Apr-15 Jan-06 Jul-06 Jul-15 Jan-07 Oct-15 Sources: Geostat, NBG Sources: NBG, GeoStat Jul-07 Jan-16 Jan-08 Jul-08 Apr-16 Jan-09 Jul-16 Jul-09 Oct-16 Jan-10 Jul-10 Jan-17 M2 vs. inflation, y-o-y,% Jan-11 Apr-17 Jul-11 Jan-12 Jul-17 Jul-12 Oct-17 M2 Y/Y % LHS
Slide 73: Current account balance adjusting after record lows
CURRENT ACCOUNT BALANCE ADJUSTING AFTER RECORD LOWS Current account balance (% of nominal GDP) Exports and Re-exports, US$ billion Sources: NBG Source: NBG 30% The CAB was -12.4% in 2020, with goods trade adjustment and record high remittances 30% Service exports Goods exports, geo-originated Re-exp
Slide 74: Record high remittances and rebounding merchandise exports
RECORD HIGH REMITTANCES AND REBOUNDING MERCHANDISE EXPORTS MITIGATING DECREASED TOURISM REVENUES Foreign investor interest remains resilient, notwithstanding the one-off fall in FDI due to ownership transfers Visitors and tourism revenues Sources: GNTA, NBG Sources: GeoStat Tourism revenues fell by
Slide 75: Tourism sector
TOURISM SECTOR Tourism revenues to GDP Spending per arrival, 2018 Sources: NBG, Geostat Source: WDI 4000 18.3% 18.8% 20% 16.6% 3500 18% 1200 1075 13.9% 16% 3000 12.9% 1000 876 14% 811 803 2500 781 763 749 740 US$ million 9.9% 10.1% 12% 800 725 721 717 2000 8.6% 10% 589 547 547 543 502 600 6.2% 8% 43
Slide 76: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE Goods’ Trade Deficit Oil imports Source: GeoStat Source: GeoStat In 1Q21, the trade deficit fell by 7.3% y-o-y, as exports grew by 5.2% while imports were cut by 2.4%. In April, the deficit grew by 45% y-o-y, with exports were up by 1,200 Oil imports, US$ mn Oil imports, %
Slide 77: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE Imports of Goods, contribution to growth Foreign Demand, 1Q21 Source: NBG Source:, Geostat 1% Import of investment goods increased in 1Q21, while intermediate and consumer Crude materials, except fuels goods continued to shrink 5% 2%0% Machinery and transport equipment Inve
Slide 78: Prudent monetary policy ensures macro-financial stability
PRUDENT MONETARY POLICY ENSURES MACRO-FINANCIAL STABILITY Monetary policy rate Sources: NBG 14 NBG increased the monetary policy rate to 8.5% in March and to 9.5% in April, as inflation is expected to remain higher than the target throughout 2021 12 9.50 10 8 6 4 2 0 Nonperforming loans to total gro
Slide 79: Floating exchange rate - policy priority
FLOATING EXCHANGE RATE - POLICY PRIORITY Central Bank’s interventions NBG has sold $1.12 billion since March 2020 up to April 2021 on Sources: NBG the foreign exchange market NBG maintains a declaration of active intervention policy to provide liquidity US$ Sales US$ Purchase Net interventions 250 2
Slide 80: Public debt to decrease throughout the medium run
PUBLIC DEBT TO DECREASE THROUGHOUT THE MEDIUM RUN Public debt Breakdown of public debt Sources: MOF Source: MOF, as of 31 December 2020 Public debt increased to 59.9% of GDP, with a consolidation plan in place for the medium run 60% 65% 55% 60% 50% 55% 45% 50% Multilateral 45% 40% 55% 40% Domestic E
Slide 81: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES ➢ Georgia Capital results discussion ➢ Georgia Capital financial statements ➢ Portfolio companies over
Slide 82: Other businesses: Beverages, Auto service, Housing development
OTHER BUSINESSES OTHER PORTFOLIO PERFORMANCE HIGHLIGHTS 1Q21 LTM 1Q21 EBITDA Revenue EBITDA Revenue Operational Change LTM Change 2021 Change Change Change Change 1Q21 GEL GEL GEL GEL metrics y-o-y 1Q21 y-o-y TARGET million y-o-y million y-o-y million y-o-y million y-o-y Number of WINE bottles solid
Slide 83: 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 84: Private portfolio companies' debt maturity profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 31 MARCH 2021 (GEL MILLION) 2021 2022 2023 2024+ Total Large portfolio companies 86.2 197.1 38.8 614.2 936.3 Healthcare Services 73.0 197.1 38.8 86.5 395.4 Retail (Pharmacy) 13.2 - - - 13.2 Water Utility (Green bonds) - - -
Slide 85: Multiple of invested capital (MOIC) | 31-Mar-2021
MULTIPLE OF INVESTED CAPITAL (MOIC) | 31-MAR-2021 GEL million Gross Investment Sell down Dividends Fair Value MOIC Realized MOIC (1) (2) (3) (4) (2+3+4) / (1) (2+3) / (1) Listed Investments 129 287 134 505 7.2x 3.3x Bank of Georgia Group PLC 129 287 134 505 7.2x 3.3x Private large portfolio companie
Slide 86: Georgia Capital's board of directors
Georgia Capital’s board of directors Board of directors - Georgia Capital PLC Irakli Gilauri, Chairman & CEO David Morrison, Senior Independent Director Experience: formerly BGEO Group CEO; Up to 20 years of Experience: formerly Director at Sullivan & Cromwell with a experience in the banking, inves
Slide 87: Georgia Capital's highly experienced management team
Georgia Capital’s highly experienced management team Georgia Capital Management Irakli Gilauri, Chairman & CEO Giorgi Ketiladze, Director, Investments Georgia Capital Georgia Capital Irakli Gilauri formerly served as the CEO of BGEO Group from 2011 to May 2018. He joined as Formerly Investment Offic
Slide 88: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES ➢ Georgia Capital results discussion ➢ Georgia Capital financial statements ➢ Portfolio companies over
Slide 89: NAV statement | 1Q21
NAV STATEMENT | 1Q21 1.Value 2a. 3.Operating 4. Liquidity GEL thousands unless otherwise 2c. Share in total 31-Dec-20 2b. Buybacks Management/ FX / 31-Mar-21 Change % noted Creation Investments Dividends Expenses portfolio (%) Other Listed Portfolio Companies BoG1 531,558 (26,452) - - - - - 505,106
Slide 90: Georgia Capital performance overview | 1Q21
GEORGIA CAPITAL PERFORMANCE OVERVIEW | 1Q21 VALUE CREATION IN PRIVATE PORTFOLIO | 1Q21 Income statement Portfolio Businesses Operating Greenfields Multiple Value Creation in Performance Change and FX 1Q21 GEL ‘000, unless otherwise noted 1Q21 1Q20 Change Dividend income 4,738 4,927 -3.8% GEL thousan
Slide 91: Number of shares outstanding development history
NUMBER OF SHARES OUTSTANDING DEVELOPMENT HISTORY ▪ In 3Q20, 7.7m shares were issued for GHG US$45 million share share exchange buyback programme, 50.00 commenced in Jun-18, 46.28 was completed in Aug-19 ▪ In Dec-19, 3.4m shares were issued for GHG 45.98 In Jun-Aug 2019, 2.7m 45.77 45.00 ▪ share exch
Slide 92: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 1Q21 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 1Q21 GEORGIAN MACRO OVERVIEW 07 APPENDICES ➢ Georgia Capital results discussion ➢ Georgia Capital financial statements ➢ Portfolio companies over
Slide 93: Georgian healthcare market overview
GEORGIAN HEALTHCARE MARKET OVERVIEW Healthcare coverage of Georgia’s 3.7m population: ▪ UHC was introduced in February 2013 and replaced most of the previously existing state- 2015 funded medical insurance plans Overview ▪ The main goal is to provide basic healthcare coverage to the entire populatio
Slide 94: 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
Slide 95: Company information
COMPANY INFORMATION Georgia Capital PLC Registered Address 84 Brook Street London W1K 5EH United Kingdom www.georgiacapital.ge Registered under number 10852406 in England and Wales Stock Listing London Stock Exchange PLC’s Main Market for listed securities Ticker: “CGEO.LN” Contact Information Georg