Georgia Capital PLC · LSE:CGEO
Georgia Capital — FY2020 Earnings Presentation
99 slides from Georgia Capital's earnings presentation, Feb 24, 2021
Slide 1: Investor Presentation 4Q20 and FY20 results
INVESTOR PRESENTATION 4Q20 and FY20 results 24 February 2021
Slide 2: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES 2
Slide 3: COVID-19 Statistics
COVID-19 STATISTICS 4-Dec-20 21-Feb-21 ECONOMY NEARING FULL REOPENING GEORGIA’S STATISTICS AS OF: Peak period of the Now % change second lockdown ACTIVE CASES 27,370 3,257 -88% Restrictions imposed/active at 28 November 2020 Status DAILY CASES 5,450 258 -95% Suspension of the municipal and inter-cit
Slide 4: Macroeconomic Fast Indicators in 2020
MACROECONOMIC FAST INDICATORS IN 2020 RECORD HIGH REMITTANCES AND DIVERSIFYING EXPORT REAL GDP GROWTH RECOVERY DYNAMICS MARKETS SUPPORTING RECOVERY Full lockdown Partial lockdown Partial lockdown Full lockdown 30% 15% 20% 25.8% 28.7% 5% 10% 22.1% 17.8% 18.6% 15.9% 12.5% 5.1% 0% 8.6% 9.5% -5% 2.2% -0
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: The Labor Market Dynamics
THE LABOR MARKET DYNAMICS AFTER FALLING IN 3Q20, THE UNEMPLOYMENT RATE THE NUMBER OF HIRED EMPLOYEES AND SALARIES DECREASED INCREASED AGAIN IN 4Q20 ON THE BACK OF RESTRICTIONS AGAIN BY THE END OF THE YEAR DUE TO THE LOCKDOWN +3.8 pp Number of hired employees, % y/y Wages received by hired employees,
Slide 7: Exchange Rate Performance
EXCHANGE RATE PERFORMANCE OFFICIAL RESERVE ASSETS REACHED HISTORIC HIGH THE REAL EFFECTIVE EXCHANGE RATE HAS DEVIATED FROM OF US$ 4.1 BILLION BY THE END OF JANUARY 2021 THE LONG-TERM TREND FOR ALREADY TWO YEARS 4,000 Official Reserve Assets, US$ mln Net Foreign Assets, US$ mln 4,000 REER (Jan 2003=1
Slide 8: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES 8
Slide 9: Georgia Capital (GCAP) Shareholders at 31-Dec-20
GEORGIA CAPITAL (GCAP) SHAREHOLDERS AT 31-DEC-20 GCAP SHAREHOLDERS ALLOCATION BY GEOGRAPHY GCAP TOP 10 SHAREHOLDERS Finland Rank Shareholder name Ownership 2.0% 1 Eaton Vance 5.95% 2 M&G Investment Management Ltd 5.77% Other 22.6% 3 Schroder Investment Management Ltd 3.95% 4 RWC 3.15% UK 2 5 Coeli F
Slide 10: 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 11: 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 12: Portfolio Highlights | December 2020
PORTFOLIO HIGHLIGHTS | 31 DECEMBER 2020 Gross investment of GEL 1.5b Net investment of GEL 570m Portfolio fair value of GEL 2.9b Listed assets Large portfolio companies Investment stage portfolio companies Original 129 390 215 10 145 56 investment MOIC1 7.4 3.4 2.6 23.9 1.5 1.6 1,189 GEL million 532
Slide 13: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES 13
Slide 14: 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 14
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 20
Slide 21: 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 YEARS GIVEN THE STRONG CASH FLOW GENERATION AT OUR INVESTMENT STAGE of which, in 2021 PORTFOLIO COMPANIES R
Slide 22: 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 YEARS ▪ 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 sati
Slide 23: 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 2025 ▪ High quality revenue with high margins ▪ Scaling up to capacity of 21,000 learners through expansion plans in existing schools and M&A
Slide 24: 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 25: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES 25
Slide 26: 2020 Lookback
2020 LOOKBACK STRONG PROGRESS AGAINST STRATEGIC PRIORITIES SEVERAL KEY ACTIVITIES IN 2020 01 02 03 04 05 06 GHG SHARE STRATEGY NEW WATER FIRST-EVER MINORITY DIVESTMENT EXCHANGE ENHANCEMENT SUPPLY TARRIFS GREEN BONDS BUYOUT IN OF HTMC FACILITY FROM RENEWABLE GEORGIA ENERGY ▪ Creating a larger combine
Slide 27: NAV per Share (GEL) Development Overview
NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW NAV PER SHARE UP 27.2% TO GEL 48.12 IN 4Q20 AND UP 2.7% IN FY20 CONTROLLABLE (PRIVATE) NAV PER SHARE UP 54% TO GEL 39.32 IN FY20 % Change q-o-q -25.0% -0.5% +69.3% +22.1% % Change q-o-q -35.6% +4.9% +19.5% +27.2% +54.4% +2.7% RETURNING TO THE PRE-PANDEMIC LEV
Slide 28: NAV per Share (GEL) Movement in 4Q20
NAV PER SHARE (GEL) MOVEMENT IN 4Q20 NAV PER SHARE CHANGE % 9.9% 18.9% 1.2% -0.5% -0.5% -1.8% 27.2% 27.2% NAV PER SHARE GROWTH Externally valued • 27.2% growth in 4Q20 NAV per share (GEL) on the back of strong value creation across our resilient private portfolio and a 36.6% increase in BoG share pr
Slide 29: NAV per Share (GEL) Movement in FY20
NAV PER SHARE (GEL) MOVEMENT IN FY20 NAV PER SHARE CHANGE % -3.8% 13.6% 13.7% 5.6% -12.4% 0.1% -1.8% -12.3% 2.7% 2.7% NAV PER SHARE GROWTH • 7.7 million CGEO shares were issued Externally valued as part of GHG transaction 1 Georgia Capital PLC | 1. Subsequent revaluation of GHG businesses in 4Q20 is
Slide 30: Aggregated Revenue Development Across Private Portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO CHANGE (Y-O-Y) +6.4% 1,800 +20.7% -3.0% +4.7% +5.1% 1,625 AGGREGATED 1,600 1,527 REVENUE UP 5.1% FULL LOCKDOWN PARTIAL LOCKDOWN • Effective from 28 321 1,400 • Effective from 21 Y-O-Y IN 4Q20 AND March through 22 May November. Gradually lifting
Slide 31: Aggregated Revenue: Private Large Portfolio Companies
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES REBOUNDING NET REVENUES IN HEALTHCARE SERVICES RESILIENT PERFORMANCE OF RETAIL (PHARMACY), FOLLOWING THE END OF FULL LOCKDOWN IN MAY-20 REVENUE UP 16.4% Y-O-Y IN 4Q20 AND UP 10.5% IN FY20 350 CHANGE (Y-O-Y) 800 CHANGE (Y-O-Y) -2
Slide 32: Aggregated Revenue: Large Portfolio Companies (Cont'd)
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) REVENUE OF WATER UTILITY DOWN 28.2% Y-O-Y IN 4Q20, TOTAL GROSS PREMIUMS WRITTEN OF P&C AND MEDICAL DOWN 20.1% IN FY20 INSURANCE UP 5.0% Y-O-Y IN 4Q20, DOWN 3.6% IN FY20 CHANGE (Y-O-Y) +9% CHANGE (Y-O-Y) 178 -6.1% -28.4%
Slide 33: Aggregated Revenue: Investment Stage Portfolio Companies
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE INVESTMENT STAGE PORTFOLIO COMPANIES STRONG PERFORMANCE OF RENEWABLE ENERGY, REVENUE EDUCATION REVENUE UP 5.3% Y-O-Y IN 4Q20 AND UP UP 88.0% Y-O-Y IN 4Q20 AND UP 163.4% IN FY20 131.5% IN FY20 50.0 CHANGE (Y-O-Y) 30.0 CHANGE (Y-O-Y) 45.0 NMF NMF +65.4% +8
Slide 34: Aggregated EBITDA Development Across Private Portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO IN 4Q20 AND FY20 CHANGE (Y-O-Y) 350 +16.4% -2.9% +4.5% +1.0% +4.1% AGGREGATED EBITDA 292 300 280 UP 1.0% Y-O-Y IN 5 4Q20 AND UP 4.1% 17 32 250 IN FY20 41 GEL MILLION 200 150 100 87 82 61 61 13 13 6 12 9 1 50 8 12 53 44 62 60 259 219 - 1Q20 2Q20
Slide 35: Aggregated Cash Balance & Net Operating Cash Flow
AGGREGATED CASH BALANCE & NET OPERATING CASH FLOW DEVELOPMENT ACROSS PRIVATE PORTFOLIO IN 2020 AGGREGATED NET OPERATING CASH FLOW UP 63% Y-O-Y IN FY20 TO GEL 376 MILLION TOTAL AGGREGATED NET OPERATING CASH FLOW TOTAL AGGREGATED CASH BALANCE OF PRIVATE BUSINESSES (GEL MILLION) (GEL MILLION) +63% +114
Slide 36: Georgia Capital Leverage & Liquidity Profile
GEORGIA CAPITAL LEVERAGE & LIQUIDITY PROFILE LTV RATIO1 IS BELOW THE TARGETED THRESHOLD OF <30% US$ 87 MILLION LIQUID FUNDS AS OF 31-DEC-20 44.1% 41.9% Cash Pre-COVID average: 22% 33.5% 33 TOTAL 30% 27.9% 28.9% Marketable 25.8% securities 87 49 20.0% 19.2% US$ MILLION 17.6% Loans issued LTV Ratio LT
Slide 37: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES 37
Slide 38: Portfolio Value Development in 4Q20
PORTFOLIO VALUE DEVELOPMENT IN 4Q20 PORTFOLIO VALUE UP 21% TO GEL 2.9 BILLION IN 4Q20 % SHARE OF LISTED ASSETS 15% 18% Externally valued GEL MILLION 38
Slide 39: Portfolio Value Development in FY20
PORTFOLIO VALUE DEVELOPMENT IN FY20 PORTFOLIO VALUE UP 29% TO GEL 2.9 BILLION IN FY20 % SHARE OF LISTED ASSETS 46% 18% Externally valued GEL MILLION 1 Georgia Capital PLC | 1. Subsequent revaluation of GHG businesses in 4Q20 is included in “large portfolio companies”. 39
Slide 40: Portfolio Value as of 31-Dec-20
PORTFOLIO VALUE AS OF 31-DEC-20 % SHARE IN TOTAL PORTFOLIO VALUE: 18% 20% 19% 16% 9% 8% 3% 7% MULTIPLE: 82% OF OUR PORTFOLIO IS BGEO PRICE ON 13.2X LTM 9.1X LTM 9.4X LTM 11.6X – 10.1X LTM P/E2 9.7X EV/EBITDA3 12.5X LTM VALUED EXTERNALLY LSE EV/EBITDA1 EV/EBITDA1 EV/EBITDA4 EV/EBITDA 572 553 532 471
Slide 41: Bank of Georgia Overview
Listed portfolio BANK OF GEORGIA OVERVIEW http://bankofgeorgiagroup.com/ Market opportunity INVESTMENT RATIONALE ▪ The first entity from Georgia to be listed on the premium segment of the Main Market of the Banking sector assets, loans and deposits London Stock Exchange (LSE: BGEO) since February 20
Slide 42: Bank of Georgia Overview
Listed portfolio BANK OF GEORGIA OVERVIEW http://bankofgeorgiagroup.com/ Stock Stock price price performance performance Financial metrics (GEL million) 25.00 GBP 12.20 20.00 2015 2016 2017 2018 2019 2020 as of 31-Dec-20 15.00 NIM 7.7% 7.4% 7.3% 6.5% 5.6% 4.6% 10.00 NPL coverage 83.4% 86.7% 92.7% 90
Slide 43: 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 44: 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 45: 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% 168% 68% 975.4 920.3 849.9 747.8 300 250 +14.6% -57.3%
Slide 46: 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 47: 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 5.2 6.4 Number of referral hospitals Number of community clinics Number of polyclinics length of stay -3.3ppts +3.6ppts 2,5
Slide 48: Healthcare Services Business Valuation Overview
Private large portfolio companies EXTERNALLY VALUED HEALTHCARE SERVICES BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q20 IMPLIED LTM EV/EBITDA (GEL MILLION) DEVELOPMENT Change q-o-q -1.3% -25.9% -44.6% +20.7% (incl. IFRS 16) 13.2x 12.2x 1 2 1 30-Sep-20 31-Dec-20 Lease liabilities VALUAT
Slide 49: 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 50: 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% 26.0% 24.2%
Slide 51: Retail (Pharmacy) Business Valuation Overview
Private large portfolio companies EXTERNALLY VALUED RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q20 IMPLIED LTM EV/EBITDA (GEL MILLION) DEVELOPMENT (incl. IFRS 16) Change q-o-q +8.7% -14.1% +6.9% +16.4% 9.1x 8.7x 1 30-Sep-20 31-Dec-20 1 VALUATION HIGHLIGHTS GEL millio
Slide 52: Medical Insurance Business Overview
Private large portfolio companies EXTERNALLY VALUED MEDICAL INSURANCE BUSINESS OVERVIEW Largest medical insurer in the country with 25.5%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 53: 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% -7.8% 75.1% 73.4% 76.9% 77.5% 73.4% 90 400 69.7% 75.4 69.5
Slide 54: Medical Insurance Business Valuation Overview
Private large portfolio companies EXTERNALLY VALUED MEDICAL INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q20 IMPLIED LTM P/E MULTIPLE (GEL MILLION) DEVELOPMENT Change q-o-q +12.9% NMF +45.8% 10.1x 8.0x 1 30-Sep-20 31-Dec-20 1 VALUATION HIGHLIGHTS GEL million, unless noted othe
Slide 55: P&C Insurance Business Overview
Private large portfolio companies EXTERNALLY VALUED P&C INSURANCE BUSINESS OVERVIEW MARKET SHARE 9M20 (gross written premiums) MARKET & ALDAGI REVENUE (GEL million) INVESTMENT RATIONALE • Significantly underpenetrated insurance market in Georgia YTD Sep-20: Market CAGR 2010-2019 345 (0.8% penetratio
Slide 56: P&C Insurance Business Overview
Private large portfolio companies EXTERNALLY VALUED P&C INSURANCE BUSINESS OVERVIEW COMBINED RATIO FY20 Financial Highlights -0.6ppts -7.8ppts 82.1% 81.5% 87.7% 79.9% GEL 102.2m GEL 17.9m 73.9% 77.5% 72.6% 75.2% 75.4% +4.0% y-o-y -8.3% y-o-y 45.5% 41.6% 44.0% 41.5% Earned premiums gross Cash flow fr
Slide 57: P&C Insurance Business Valuation Overview
Private large portfolio companies EXTERNALLY VALUED P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q20 IMPLIED LTM P/E (GEL MILLION) MULTIPLE DEVELOPMENT Change q-o-q NMF NMF NMF +40.8% 11.6x 8.3x 30-Sep-20 31-Dec-20 VALUATION HIGHLIGHTS GEL million, unless noted 31-Dec-20 3
Slide 58: 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 59: Water Utility Business Overview (Cont'd)
Private large portfolio companies EXTERNALLY VALUED WATER UTILITY BUSINESS OVERVIEW (CONT’D) FY20 OPERATING HIGHLIGHTS REVENUE HIGHLIGHTS EBITDA Energy Total 123 119 127 135 149 163 131 44 32 95 53.4 million KWh 13.0 Tetri/KWh 9 20 83 73 -55.5% -69.9% y-o-y 15.1% y-o-y 10 6 69 GEL million 10 -28.2%
Slide 60: Water Utility Business Valuation Overview
Private large portfolio companies EXTERNALLY VALUED WATER UTILITY BUSINESS VALUATION OVERVIEW EBITDA AND EV/EBITDA VALUE DEVELOPMENT OVERVIEW | 4Q20 MULTIPLE HIGHLIGHTS (GEL MILLION) Change q-o-q +10.0% +14.3% EBITDA 98.7 1 109.9 2 +6.0% (GEL million) 9.4x 8.5x Tariff adjusted Normalised implied 202
Slide 61: Renewable Energy Business Overview
Private investment stage portfolio companies INTERNALY VALUED RENEWABLE ENERGY BUSINESS OVERVIEW INVESTMENT RATIONALE MARKET OPPORTUNITY ▪ Electricity demand has been outpacing the supply by 5.1% over the last decade. ▪ Underutilized energy resources resulting in high availability of economically fe
Slide 62: Renewable Energy Business Overview (Cont'd)
Private investment stage portfolio companies INTERNALY VALUED RENEWABLE ENERGY BUSINESS OVERVIEW (CONT’D) FY20 PERFORMANCE RENEWABLE ENERGY PROJECTS OVERVIEW | 31 DECEMBER 2020 EBITDA margin 79.4% 70.6% 78.1% Actual/ Gross Commissioned Installed capacity Target PPA PPA tariff, capacity factor projec
Slide 63: Renewable Energy Business Valuation Overview
Private investment stage portfolio companies INTERNALY VALUED RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q20 EQUITY FAIR VALUE (GEL MILLION) COMPOSITION AT Change q-o-q +2.4% NMF +4.2% 31-DEC-20 (GEL MILLION) 41 Total value 210 169 Operational assets Pipeline projects
Slide 64: 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 65: Education Business Overview (Cont'd)
Private investment stage portfolio companies INTERNALLY VALUED EDUCATION BUSINESS OVERVIEW (CONT’D) FY20 Operating highlights PRIVATE K-12 MARKET IN GEORGIA 89.5% -2.4ppts y-o-y Market growing at c.2x nominal GDP growth rate Capacity utilization 2,516 Private K-12 learners in Georgia Private K-12 ma
Slide 66: Education Business Valuation Overview
Private investment stage portfolio companies INTERNALLY VALUED EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q20 LTM EV/EBITDA (GEL MILLION) DEVELOPMENT Change q-o-q +19.2% +0.7% +27.5 +15.7 +15.3% 12.5x 12.5x 2 30-Sep-20 31-Dec-20 VALUATION HIGHLIGHTS GEL million, unless noted
Slide 67: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES 67
Slide 68: Sovereign Ratings with Favourable Macro Fundamentals
SOVEREIGN RATINGS WITH FAVOURABLE MACRO FUNDAMENTALS Key Ratings Highlights General Facts Rating Agency Rating Outlook Affirmed Ba2 Stable August 2020 BB Stable August 2020 Georgia BB Negative August 2020 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook Armenia B+
Slide 69: 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 70: 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 71: 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, 9M20 Real GDP fell by 5.8% in 9M20. According to rapid estimates, the full year recession was -6.1%, with 4Q fall of -6.5% due to the 2nd lockdown Accommodation and food Information and Healt
Slide 72: 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 73: Inflation to Stay Slightly Above Target
INFLATION TO STAY SLIGHTLY ABOVE TARGET Inflation y-o-y vs. inflation target Price Indices Sources: NBG, GeoStat Source: GeoStat Inflation was under the 3% target in December-January because of a one-off 11 impact of government-subsidized utilities being subtracted from price 9 8 8 changes. We expec
Slide 74: 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% in 9M20, with goods trade adjustment and record high money transfers 30% Service exports Goods exports, geo-originated Re-e
Slide 75: Record High Remittances Mitigating Decreased Tourism Revenues
RECORD HIGH REMITTANCES MITIGATING DECREASED TOURISM REVENUES Foreign investor interest remains resilient Visitors and tourism revenues Sources: GeoStat Sources: GNTA, NBG Tourism revenues fell by 83% in 2020, as borders remain closed, including a 96% fall in Apr-Dec 2,000 25% 9.4 1,800 3600 8.7 10
Slide 76: Tourism Sector
TOURISM SECTOR Tourism revenues to GDP Spending per arrival, 2018 Sources: NBG, Geostat Source: WDI 4000 25% 18.8% 20.3% 3500 18.3% 1200 1075 16.6% 20% 3000 1000 876 13.9% 811 803 781 763 2500 US$ million 12.9% 15% 749 740 725 721 717 800 2000 9.9% 10.1% 589 547 547 543 8.6% 600 502 1500 10% 432 5.4
Slide 77: Diversified Foreign Trade
DIVERSIFIED FOREIGN TRADE Goods’ Trade Deficit Oil imports Source: GeoStat Source: GeoStat In 2020, the trade deficit fell by 18.5%, as exports were cut by 12% and imports contracted by 15.9% on the back of the pandemic 1,200 Oil imports, US$ mn Oil imports, % change, y/y 0 50% 90% 1,000 40% -100 30
Slide 78: Diversified Foreign Trade
DIVERSIFIED FOREIGN TRADE Imports of Goods, contribution to growth Foreign Demand, 2020 Source: NBG Source:, Geostat 1% All types of goods contributed to shrinking imports in 2020, with consumer goods Crude materials, except fuels responsible for over a half of the total cut 3% 1% 5% Machinery and t
Slide 79: Prudent Monetary Policy Ensures Macro-Financial Stability
PRUDENT MONETARY POLICY ENSURES MACRO-FINANCIAL STABILITY International reserves Monetary policy rate Sources: NBG Sources: NBG International reserves reached a record high of $3.9 billion by the end of 4,000 2020 as a result of external funding, up 11.5%, providing ample cover 4,000 14 NBG lowered
Slide 80: Exchange Rate and Central Bank Interventions
US$ Purchase US$ sale 90 100 110 120 130 140 150 50 -150 -100 0 150 200 250 100 -50 03/Jan/20 Sources: NBG Sources: NBG 16/Jan/20 Jan-17 29/Jan/20 Mar-17 -20 11/Feb/20 May-17 24/Feb/20 -70 USD/GEL 08/Mar/20 Jul-17 -40 21/Mar/20 Sep-17 03/Apr/20 Nov-17 16/Apr/20 29/Apr/20 Jan-18 USD/TRY 12/May/20 Mar
Slide 81: Public Debt to Rise in the Short Run
PUBLIC DEBT TO RISE IN THE SHORT RUN Public debt Breakdown of public debt Sources: MOF Source: MOF, as of 31 October 2020 Public debt is expected to increase to around 60% of GDP, with a consolidation plan in place for the medium run 60% 65% 55% 60% 50% 55% 45% 50% Multilateral 45% 40% 56% 40% Domes
Slide 82: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES ➢ Georgia Capital results discussion ➢ Georgia Capital financial statements ➢ Portfolio compani
Slide 83: Other Businesses: Performance Highlights
OTHER BUSINESSES OTHER PORTFOLIO PERFORMANCE HIGHLIGHTS Change Change 2021 KPI 4Q20 FY20 TARGET y-o-y y-o-y Number of bottles 3.2 +45.1% 7.2 +19.4% 11.0-12.5 BEVERAGES WINE sold in million BEER (INCL. Sales in DISTRIBUTION) hectoliters 45,316 -9.3% 272,567 +8.5% c. 295,000 Revenue in AUTO SERVICE AM
Slide 84: 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 85: Private Portfolio Companies' Debt Maturity Profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 31 DECEMBER 2020 (GEL MILLION) 2021 2022 2023 2024+ Total Large portfolio companies 110.3 184.5 36.3 593.7 924.8 Healthcare Services 101.5 184.5 36.3 82.4 404.7 Retail (Pharmacy) 8.8 - - - 8.8 Water Utility (Green bonds) -
Slide 86: Multiple of Invested Capital (MOIC) | 31-Dec-2020
MULTIPLE OF INVESTED CAPITAL (MOIC) | 31-DEC-2020 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 129 287 134 532 7.4x 3.3x Bank of Georgia Group PLC 129 287 134 532 7.4x 3.3x Private large portfolio companie
Slide 87: 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 88: 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 89: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES ➢ Georgia Capital results discussion ➢ Georgia Capital financial statements ➢ Portfolio compani
Slide 90: NAV Statement | 4Q20
NAV STATEMENT | 4Q20 1.Value 2a. 3.Operating 4. Liquidity Share in total GEL thousands unless otherwise noted 30-Sep-20 2b. Buybacks 2c. Dividends 31-Dec-20 Change % Creation Investments Expenses Management/ FX / Other portfolio (%) Listed Portfolio Companies Bank of Georgia (BoG)1 360,100 171,458 -
Slide 91: NAV Statement | FY20
NAV STATEMENT | FY20 1. Value 2a. 2b. 2d. GHG 3.Operating 4. Liquidity/ Change GEL ‘000, unless otherwise noted 31-Dec-19 2c. Dividend 31-Dec-20 creation Investment Buyback delisting expenses FX/Other % Listed Portfolio Companies Georgia Healthcare Group (GHG) 430,079 (195,347) 138,265 - - (372,997)
Slide 92: Value Creation in Private Portfolio | 4Q20 & FY20
VALUE CREATION IN PRIVATE PORTFOLIO | 4Q20 & FY20 VALUE CREATION IN 4Q20 VALUE CREATION IN FY20 Operating Multiple Value Creation in Operating Multiple Value Creation in Portfolio Businesses Greenfields Portfolio Businesses Greenfields Performance Change and FX 4Q20 Performance Change and FX FY20 GE
Slide 93: Georgia Capital 4Q20 & FY20 Performance Overview
GEORGIA CAPITAL 4Q20 & FY20 PERFORMANCE OVERVIEW Income statement GEL ‘000, unless otherwise noted 4Q20 4Q19 Change FY20 FY19 Change Dividend income 14,972 35,943 -58.3% 29,870 122,219 -75.6% Interest income 4,307 7,647 -43.7% 20,957 39,044 -46.3% Realised / unrealised (loss)/ gain on liquid funds 1
Slide 94: 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 50.00 share exchange buyback programme, commenced in Jun-18, 45.98 was completed in Aug-19 ▪ In Dec-19, 3.4m shares 45.77 45.00 were issued for GHG ▪ In Jun-Aug 2019, 2.7m share exchange s
Slide 95: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 GEORGIA CAPITAL AT A GLANCE 03 STRATEGY AND CAPITAL ALLOCATIONS 04 4Q20 & FY20 RESULTS OVERVIEW 05 PORTFOLIO OVERVIEW 06 FY20 GEORGIAN MACRO OVERVIEW 07 APPENDICES ➢ Georgia Capital results discussion ➢ Georgia Capital financial statements ➢ Portfolio compani
Slide 96: 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 97: P&C Insurance Business | Segment Results in FY20
P&C INSURANCE BUSINESS | SEGMENT RESULTS IN FY20 Well-diversified business model Key Segments Motor(2) Property(3) Credit life(4) Liability(5) Other(6) Market size (3Q20) (1) GEL 107mln GEL 63mln GEL 36mln GEL 31mln GEL 36mln Aldagi market share (1) 23% 36% 28% 35% 22% (1) Sources: Insurance State S
Slide 98: 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 99: 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