Georgia Capital PLC · LSE:CGEO
Georgia Capital — Q3 2023 Earnings Presentation
49 slides from Georgia Capital's earnings presentation, Oct 31, 2023
Slide 1: 3Q23 & 9M23 Results Call Presentation
3Q23 & 9M23 RESULTS CALL PRESENTATION 31 OCTOBER 2023
Slide 2: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 2
Slide 3: Recent Developments
1 NAV per share (GEL) up 5.1% q-o-q to GEL 76.99, supported by BoG’s outstanding performance and share price growth 2 NCC ratio improved by 8.5 ppts y-o-y to 15.9% as at 30-Sep-23 (1.5 ppts improvement q-o-q), resulting from a significant decrease in net debt, strong cash generation and continued gr
Slide 4: Significant Progress on Deleveraging
SIGNIFICANT PROGRESS ON DELEVERAGING NET DEBT1 DOWN 25% Y-O-Y AND DOWN 13% Q-O-Q TO US$ 110 MILLION AT 30-SEP-23 SIGNIFICANT DECREASE IN NET DEBT, Net debt (US$ million) 1 REFLECTING STRONG CASH GENERATION 350 Gross debt (US$ million) AND SUCCESSFUL REFINANCING OF 500 EUROBONDS 300 363 400 250 304 ✓
Slide 5: Net Capital Commitment (NCC) Overview
NET CAPITAL COMMITMENT (NCC) OVERVIEW Change Change Now US$ Million 30-Sep-22 30-Jun-23 (y-o-y) (q-o-q) 30-Sep-23 NCC RATIO IMPROVED BY 8.5 PPTS Cash and liquid funds 133.9 -72.0% 153.2 -75.5% 37.5 Y-O-Y AND 1.5 PPTS Q-O-Q TO Loans issued 89.3 -96.3% 6.7 -50.2% 3.3 15.9% AS AT 30-SEP-23 Accrued divi
Slide 6: 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 365.9 345.7 AT THE GCAP HOLDCO LEVEL 42.5% We are targeting to reduce the balance of “net 39.8% 248.5 250.1 debt and guarantees issued
Slide 7: Commencement of a New US$ 15 Million Share Buyback and Cancellation Program
COMMENCEMENT OF A NEW US$ 15 MILLION SHARE BUYBACK AND CANCELLATION PROGRAM DEVELOPMENT OF SHARE BUYBACK AND CANCELLATION PROGRAMMES nity Inve st tu or GCAP SHARE m pp en ko t op 2.7 PRICE IS AT CORE Buybac 360o 2.3 portunity ANALYSIS OF OUR DECISION 0.9 1.0 c. 1.2 1 NUMBER OF SHARES MAKING 36.0 8.1
Slide 8: Update on the Expansion of the Education Business
UPDATE ON THE EXPANSION OF THE EDUCATION BUSINESS NUMBER OF LEARNERS AND TOTAL LEARNER CAPACITY DEVELOPMENT OVERVIEW NUMBER OF LEARNERS CAGR: 37.4% 1st grader INCREASED AT 23.1% CAGR intakes 245 246 279 548 873 1st grader intakes OVER THE LAST 4 YEARS 8,500 7,270 8,000 7,500 7,000 ▪ In 3Q23, the tot
Slide 9: Strategic Reorganisation Across Our Healthcare Businesses
STRATEGIC REORGANISATION ACROSS OUR HEALTHCARE BUSINESSES CURRENT STRUCTURE NEW STRUCTURE FACILITIES SHARE IN EBITDA TO CAPTURE EMERGING OPPORTUNITIES HOSPITALS ARISING FROM NEW GOVERNMENT Large portfolio REGULATIONS, ENSURE UNINTERRUPTED LARGE AND SPECIALTY 6 c.60% BUSINESS OPERATIONS, AND ENHANCE
Slide 10: Strong NAV per Share Growth
STRONG NAV PER SHARE GROWTH STRONG NAV PER SHARE (GEL) GROWTH NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW WITH 12.3% CAGR SINCE DEC-18 +12.3% CAGR IN US$ AND GBP TERMS, NAV PER SHARE CAGR STANDS AT 12.3% AND 13.1%, +17.4% RESPECTIVELY 77.0 63.0 65.6 46.8 48.1 44.3 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Sep
Slide 11: 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 31 Free cash flow is determined by subtracting 1
Slide 12: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 12
Slide 13: Real GDP Up by 6.8% in 9M23, While Inflation Has Fallen Below the Target
REAL GDP UP BY 6.8% IN 9M23, WHILE INFLATION HAS FALLEN BELOW THE TARGET PRELIMINARY ECONOMIC GROWTH STANDS AT 6.8% Y-O-Y IN 9M23, ANNUAL INFLATION STANDING BELOW THE 3% TARGET SINCE APRIL 2023, FOLLOWING TWO YEARS OF DOUBLE-DIGIT EXPANSION (10.5% AND 10.1% IN WITH SEPTEMBER 2023 INFLATION PRINTED A
Slide 14: ICT Sector: Boosts GDP Growth and Emerges as New Source for Foreign Currency Flows
ICT SECTOR: BOOSTS GDP GROWTH AND EMERGES AS A NEW SOURCE FOR THE FOREIGN CURRENCY FLOWS THE INFORMATION AND COMMUNICATION (ICT) SECTOR SHARE IN GDP EXPORTS OF ICT SERVICES (US$ MLN) STANDING AT 4.9% IN 2Q23, AS OPPOSED TO 3.1% IN 2018-2021 Information and Communication, Value Added (GEL mln, LHS) T
Slide 15: The Growing Importance of Middle Corridor
THE GROWING IMPORTANCE OF “MIDDLE CORRIDOR” RE-EXPORT INCREASED BY 89% Y-O-Y IN 9M23, AND BY 199% COMPARED TO THE REVENUES FROM ROAD USAGE CHARGE (RUC) INCREASED BY 59% Y-O-Y AND BY 9M21, MOSTLY DUE TO THE INCREASED RE-EXPORT OF MOTOR CARS 176% COMPARED TO 9M21 Motor cars Cigars and cigarettes Medic
Slide 16: Improved External Position
IMPROVED EXTERNAL POSITION TOTAL FX INFLOWS INCREASED BY 17.8% Y-O-Y AND AMOUNTED TO US$ 11.1 BLN CURRENT ACCOUNT DEFICIT HAS NARROWED SIGNIFICANTLY AS FDI CONTINUES IN 9M23 TO FULLY FINANCE THE DEFICIT Export of goods Money Transfers Tourism revenues Total FX Inflows Goods, net Services, net Invest
Slide 17: 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% 10 60% 8 50% 47.6% 41.8% 4 39.8% 37
Slide 18: Macroeconomic Wrap-Up
STRONG GDP PERFORMACE BELOW - TARGET INFLATION ROBUST EXTERNAL BALANCE SHEET MACROECONOMIC WRAP-UP GEL/US$ ABOVE THE PRE-PANDEMIC LEVELS SOUND MACROECONOMIC FRAMEWORK 18
Slide 19: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 19
Slide 20: Aggregated Revenue Development Across Private Portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED REVENUE UP +9.6% 6.7% Y-O-Y IN 3Q23 1,532 1,398 +6.7% 433 ▪ 9M23 aggregated revenue up 9.6% y-o-y 350 525 492 126 125 162 152 40 41 301 322 923 973 3Q22 3Q23 9M22 9M23 Other portfolio companies Other portfolio companies I
Slide 21: Aggregated EBITDA Development Across Private Portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED EBITDA UP +4.2% 3.8% IN 3Q23 AND UP 4.2% Y-O-Y IN 9M23 193 185 30 36 +3.8% ➢ 3Q23 and 9M23 performance reflects a 41 number of regulatory changes, particularly 44 within the healthcare sector, which in the 67 70 short-term
Slide 22: 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) -34.6% 153 31-Dec-22 310 -15.6% -27.0% 100 70 30-Jun-23 +4.6% 51 250 30-Sep-23 262 3Q22 3Q23
Slide 23: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 23
Slide 24: NAV per Share (GEL) Movement in 3Q23
NAV PER SHARE (GEL) MOVEMENT IN 3Q23 +7.3% -1.5% -0.3% -0.4% +5.1% NAV PER SHARE (GEL) UP 5.1% Q-O-Q TO 76.99 ▪ NAV per share (GEL) performance in 3Q23 mainly reflects continued recovery in BoG’s share price. In GBP: +6.0% In GBP: 22.12 23.44 24
Slide 25: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 25
Slide 26: Portfolio Value as of 30-Sep-23
PORTFOLIO VALUE AS OF 30-SEP-23 % SHARE IN TOTAL PORTFOLIO VALUE: 78% OF OUR PORTFOLIO 91% IS OF OUR PORTFOLIO 31% 5% 20% 11% 10% 7% 5% 3% 9% ISVALUED VALUED EXTERNALLY EXTERNALLY1 1 GBP 36.90 OPTION MULTIPLE: 12.5x 11.8x-9.3x 12.5x 16.5x6 12.8x7 BGEO VALUATION2 9.1x LTM EV/EBITDA3 LTM P/E4 EV/EBITD
Slide 27: Portfolio Value Development in 3Q23
PORTFOLIO VALUE DEVELOPMENT IN 3Q23 PORTFOLIO VALUE UP 3.5% TO GEL 3.5 BILLION IN 3Q23 ▪ The value of the listed and observable portfolio increased by GEL 209.4 million. ▪ The value creation in the private portfolio LISTED AND OBSERVABLE PORTFOLIO PRIVATE PORTFOLIO VALUE amounted to negative GEL 46.
Slide 28: Retail (Pharmacy) Business Operating Performance Overview
RETAIL (PHARMACY) BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT RETAIL (PHARMACY) +3.3% KEY DRIVERS 600 581 +8.5% ▪ The y-o-y increase in revenues and EBITDA reflects the expansion of the pharmacy chain and GEL MILLION +5.2% franchise stores, along with overall econ
Slide 29: Retail (Pharmacy) Business Valuation Overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q23 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q +2.6% +28.0% NMF -6.1% 9.2x 9.1x 30-Jun-23 30-Sep-23 VALUATION HIGHLIGHTS1 ADJUSTED NET DEBT TO EBITDA2 (excl. IFRS 16) 2.3x GEL million, un
Slide 30: Hospitals Business Operating Performance Overview
HOSPITALS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +2.0% HOSPITALS 220 KEY DRIVERS 216 ▪ To address the oversupply of beds and GEL MILLION enhance the quality of the healthcare industry -3.8% in Georgia, the government introduced a new facility regulation, effe
Slide 31: Hospitals Business Valuation Overview
Externally valued1 HOSPITALS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q23 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q -5.2% +3.9% 0.0% -10.4% 12.9x 12.5x 30-Jun-23 30-Sep-23 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA (excl. IFRS 16) GEL million, unless noted otherwise
Slide 32: Insurance Business Operating Performance Overview
INSURANCE BUSINESS OPERATING PERFORMANCE OVERVIEW INSURANCE REVENUE NET INCOME DEVELOPMENT +21.0% +2.8% 152 INSURANCE KEY DRIVERS 126 P&C Insurance 67 17 18 ▪ The increase in insurance revenue is mainly GEL MILLION +22.0% 54 1 driven by the growth in the motor, credit life and 4 agricultural insuran
Slide 33: P&C Insurance Business Valuation Overview
Externally valued1 P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q23 IMPLIED LTM P/E MULTIPLE DEVELOPMENT (GEL MILLION) Change q-o-q -3.3% 11.8x 10.1x 30-Jun-23 30-Sep-23 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise 30-Sep-23 30-Jun-23 Change
Slide 34: Renewable Energy Business Operating Performance Overview
RENEWABLE ENERGY BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT -2.3% RENEWABLE ENERGY -9.9% 12 11 KEY DRIVERS +2.8% +0.1% -2.7% 9 ▪ A 2.8% y-o-y increase in 3Q23 revenue 5 US$ MILLION 5 8 reflects the net impact of: o A 1.3% y-o-y decrease in electricity 5 6 generati
Slide 35: Renewable Energy Business Valuation Overview
Externally valued1 RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q23 EQUITY FAIR VALUE COMPOSITION AT 30-SEP-23 (US$ MILLION) (US$ MILLION) Change q-o-q 0.3% -3.1% 2.9% 21 Total value US$ 97 77 Operational assets Pipeline projects VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA
Slide 36: Education Business Operating Performance Overview
EDUCATION BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT EDUCATION +25.1% -6.4% 36 KEY DRIVERS GEL MILLION ▪ A 14.7% y-o-y increase in 3Q23 revenues were driven by: 29 +14.7% o organic growth through strong intakes and a 8.6 ramp-up of the utilization; 8.0 o expansion
Slide 37: Education Business Valuation Overview
Externally valued1 EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q23 LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q -8.5% +2.5% -3.3% -8.6% -7.2% 16.3x 16.5x 30-Jun-23 30-Sep-23 2 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise 30-Sep-23 30-Ju
Slide 38: Clinics & Diagnostics Business Operating Performance Overview
CLINICS & DIAGNOSTICS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT2 EBITDA1 DEVELOPMENT -1.3% CLINICS & DIAGNOSTICS 65 65 KEY DRIVERS +33.8% 16 13 ▪ The y-o-y increase in total revenues in 3Q23 is 11 GEL MILLION attributable to higher demand for non-COVID +7.9% 49 51 NMF 8 1 regular a
Slide 39: Clinics & Diagnostics Business Valuation Overview
Externally valued1 CLINICS & DIAGNOSTICS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q23 IMPLIED LTM EV/EBITDA DEVELOPMENT2 (GEL MILLION) Change q-o-q -3.3% 3.4% -7.5% -8.0% 18.8x 12.8x 30-Jun-23 30-Sep-23 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA (excl. IFRS 16) GEL million, unless not
Slide 40: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 40
Slide 41: Liquidity Outlook
LIQUIDITY OUTLOOK LIQUIDITY DEVELOPMENT OVERVIEW (US$ MILLION) GROSS DEBT (US$ million) * LIQUIDITY DOWN BY 75.4% IN US$ TERMS IN 9M23, 300 300 365 365 300 150 150 MAINLY REFLECTING THE REDEMPTION OF GCAP’S EUROBONDS IN 3Q23, WHICH WAS PARTIALLY FINANCED BY GCAP’S EXISTING LIQUID FUNDS Cash receipt
Slide 42: Dividend Income Outlook
DIVIDEND INCOME OUTLOOK CASH DIVIDEND INCOME FROM PORTFOLIO COMPANIES GEL 202 MILLION DIVIDEND INCOME IN 9M23 +2.2x DIVIDENDS INCOME RECURRING ONE-OFF TOTAL (GEL million) 202 BOG 96.8 29.4 126.2 Of which, cash dividends 52.8 - 52.8 Of which, buyback dividends GEL MILLION 44.0 29.4 73.4 73 Retail (Ph
Slide 43: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 43
Slide 44: Solid Performance Across Our Portfolio
SOLID PERFORMANCE ACROSS OUR PORTFOLIO PERFORMANCE HIGHLIGHTS ✓ NAV per share (GEL) up 5.1% q-o-q to GEL 76.99, supported by BoG’s outstanding performance and share price growth NCC ratio improved by 8.5 ppts y-o-y to 15.9% as at 30-Sep-23 (1.5 ppts improvement q-o-q), resulting from a significant d
Slide 45: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q23 & 9M23 PERFORMANCE OVERVIEW 04 3Q23 & 9M23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 45
Slide 46: Deleveraging Across Our Private Portfolio
DELEVERAGING ACROSS OUR PRIVATE PORTFOLIO TARGET AGGREGATED LEVERAGE ADJUSTED NET DEBT/EBITDA 30-JUN-23 CHANGE 30-SEP-23 (OVER THE CYCLE) ACROSS OUR PRIVATE LARGE AND INVESTMENT STAGE LARGE PORTFOLIO COMPANIES PORTFOLIO COMPANIES AT Retail (pharmacy)1 1.7x +0.6x 2.3x Up to 1.5x 3.1x AS OF 30-SEP-23
Slide 47: Private Portfolio Companies' Debt Maturity Profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 30 SEPTEMBER 2023 (GEL MILLION) 2023 2024 2025 2026+ Total Large portfolio companies 25.9 252.4 51.8 100.8 430.9 Retail (pharmacy)1 17.1 125.2 26.1 49.5 217.9 Hospitals 8.8 127.2 25.7 51.3 213.0 Investment stage portfolio c
Slide 48: 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 49: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or int