Georgia Capital PLC · LSE:CGEO
Georgia Capital — FY2020 Earnings Presentation
40 slides from Georgia Capital's earnings presentation, Feb 24, 2021
Slide 1: 4Q20 and FY20 Results Call Presentation
4Q20 AND FY20 RESULTS CALL PRESENTATION 24 February 2021
Slide 2: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 4Q20 & FY20 RESULTS OVERVIEW 03 4Q20 & FY20 NAV DEVELOPMENT 04 4Q20 & FY20 VALUATION OVERVIEW 05 WRAP-UP 06 ANNEX 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: 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 6: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 4Q20 & FY20 RESULTS OVERVIEW 03 4Q20 & FY20 NAV DEVELOPMENT 04 4Q20 & FY20 VALUATION OVERVIEW 05 WRAP-UP 06 ANNEX 6
Slide 7: 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 8: 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 9: Aggregated Revenue Across 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 10: Aggregated Revenue Across 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 11: Aggregated Revenue Across 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) NMF NMF +65.4% +88.0%
Slide 12: 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 13: Aggregated Cash Balance and 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 14: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 4Q20 & FY20 RESULTS OVERVIEW 03 4Q20 & FY20 NAV DEVELOPMENT 04 4Q20 & FY20 VALUATION OVERVIEW 05 WRAP-UP 06 ANNEX 14
Slide 15: NAV per Share 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 16: NAV per Share 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 17: NAV per Share 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 18: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 4Q20 & FY20 RESULTS OVERVIEW 03 4Q20 & FY20 NAV DEVELOPMENT 04 4Q20 & FY20 VALUATION OVERVIEW 05 WRAP-UP 06 ANNEX 18
Slide 19: 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 19
Slide 20: 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”. 20
Slide 21: 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 22: Healthcare Services Business Valuation Overview
Externally valued HEALTHCARE SERVICES BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 4Q20 IMPLIED LTM EV/EBITDA (GEL MILLION) DEVELOPMENT (incl. IFRS 16) Change q-o-q -1.3% -25.9% -44.6% +20.7% 13.2x 12.2x 1 2 30-Sep-20 31-Dec-20 1 Lease liabilities VALUATION HIGHLIGHTS GEL million, unless
Slide 23: Retail (Pharmacy) Business Valuation Overview
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 million, unless noted otherwise 31-Dec-2
Slide 24: Medical Insurance Business Valuation Overview
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 otherwise 31-Dec-20 30-Sep-201 Change
Slide 25: P&C Insurance Business Valuation Overview
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 30-Sep-20 Change 31-Dec-19 Change o
Slide 26: Water Utility Business Valuation Overview
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 2020 EBITDA 2 EV/EBITDA multiple (use
Slide 27: Renewable Energy Business Valuation Overview
Internally 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 VALUATION HIGHLIGHTS GEL million, unless no
Slide 28: Education Business Valuation Overview
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 otherwise 31-Dec-20 30-Sep-20 Change 31-Dec-
Slide 29: 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% 28.9% Marketable 87 27.9% 25.8% securities 20.0% 49 19.2% US$ MILLION 17.6% Loans issued LTV Ratio LT
Slide 30: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 4Q20 & FY20 RESULTS OVERVIEW 03 4Q20 & FY20 NAV DEVELOPMENT 04 4Q20 & FY20 VALUATION OVERVIEW 05 WRAP-UP 06 ANNEX 30
Slide 31: Solid Performance Across Private Portfolio, Outlook Even Stronger
SOLID PERFORMANCE ACROSS OUR PRIVATE PORTFOLIO, WITH OUTLOOK BEING EVEN STRONGER PERFORMANCE HIGHLIGHTS 27.2% growth in 4Q20 NAV per share (GEL) on the back of strong value creation across our resilient and defensive private portfolio ✓ and a 36.6% increase in BoG share price during the quarter Outs
Slide 32: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 4Q20 & FY20 RESULTS OVERVIEW 03 4Q20 & FY20 NAV DEVELOPMENT 04 4Q20 & FY20 VALUATION OVERVIEW 05 WRAP-UP 06 ANNEX 32
Slide 33: Other Businesses
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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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