Georgia Capital PLC · LSE:CGEO
Georgia Capital — FY2018 Earnings Presentation
47 slides from Georgia Capital's earnings presentation, Feb 21, 2019
Slide 1: Investor Presentation: 2H18 & FY18 results
Georgia-focused investment company Investor Presentation: 2H18 & FY18 results 10 x = 10 y 21 February Page 1 2019
Slide 2: Forward looking statements
Forward looking statements Disclaimer 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, p
Slide 3: Content
Content 1. 2H18 & FY18 results discussion | Investment portfolio Late stage • Water Utility • Housing Development • P&C Insurance Early stage • Renewable Energy • Hospitality & Commercial Real Estate • Beverages 2. Appendices Page 3
Slide 4: Water utility business financial highlights
Water utility business financial highlights Income statement Balance Sheet Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change GEL thousands, unless Dec-18 Dec-17 Change otherwise noted Revenue from water supply to legal entities 50,078 47,055 6.4% 42,15
Slide 5: Water utility business financial highlights: cash flow
Water utility business financial highlights Cash flow statement Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change Cash received from customers 78,442 74,645 5.1% 66,031 18.8% 144,473 131,403 9.9% Cash paid to suppliers (20,810) (22,132) -6.0% (18,096)
Slide 6: Water utility business overview
Water utility business overview Utility Water Utility GEL millions, unless otherwise noted Natural monopoly in water utility Key highlights 2018 2017 change servicing c. 1.4m population Revenue 149.1 135.0 10.5% (Provision of water and wastewater services in Tbilisi and surrounding areas) EBITDA 83.
Slide 7: Water utility business performance highlights
Water utility business performance highlights Strong performance Water Utility EBITDA Revenue composition Total revenue EBITDA margin 55.7% 53.3% 58.2% 53.8% 55.9% 74 70 79 135 149 Development 8 Housing 6 9 GEL millions GEL millions 10 4 5 83 3 73 7 5 4 132 119 41 37 46 70 64 62 P&C Insurance 2H17 1
Slide 8: Georgian utility market overview
Georgian utility market overview Water Utility Largely privatized utility sector with high barriers to entry Coverage Coverage byby population population ■ Utilities sector represents ~3% of total economic output in Georgia and is constantly Water growing at a sustainable rate (CAGR 8.2% in 2006 – 2
Slide 9: Water utility business strategy
Water utility business strategy Business strategy Water Utility Medium term outlook Targeting • The outlook in medium term is positive as management expects further continued growth in revenues Development Housing - Organic growth in water supply with limited increase in operating expenses Stable di
Slide 10: Content
Content 1. 2H18 & FY18 results discussion | Investment portfolio Late stage • Water Utility • Housing Development • P&C Insurance Early stage • Renewable Energy • Hospitality & Commercial Real Estate • Beverages 2. Appendices Page 10
Slide 11: Housing development business financial highlights
Housing development business financial highlights Income statement Balance Sheet Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change GEL thousands, unless otherwise noted Dec-18 Dec-17 change Gross profit from apartments sale 3,040 5,896 -48.4% 6,405 -52
Slide 12: Housing development business financial highlights: cash flow
Housing development business financial highlights Statement of Cash Flow Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change Proceeds from sales of apartments 43,555 66,595 -34.6% 37,137 17.3% 80,692 112,215 -28.1% Outflows for development (31,273) (43,2
Slide 13: m2 – a leading player on Georgian real estate market
m2 – a leading player on Georgian real estate market Housing Development – Market of US$ 1.1 bln1 Water Utility 1 Affordable housing 2 Franchise m2 3 Construction Management Earn Construction management fees Fully Develop land bank with total Develop third-party land plots under from third-party pro
Slide 14: Housing development business performance highlights
Housing development business performance highlights Strong sales performance Water Utility Key highlights 2018 apartments sales track record 98.3% of apartments are sold-out GEL millions, unless otherwise noted 2018 2017 Change 2 Revenue 137.8 115.1 19.7% 91 2,558 Development Gross real estate profi
Slide 15: Affordable housing track record
Affordable housing track record Water Utility Operating/Financial data for completed and on-going projects at 31 December 20181 Deferred Actual / Number of Number of sq.m. Number of Sq.m. of revenue Total Sq.m. Sq.m. of Number of Planned Recognised Deferred Land value Number of apartments apartments
Slide 16: Housing development business – market opportunity
Housing development business – market opportunity Average household size and home ownership | 2016 # of housing units developed by time periods Water Utility Source: Eurostat, Colliers International Source: Colliers International 93% 96% 90% 90% 86% 90% 83% 82% 81% Thousands 69% Development Housing
Slide 17: Content
Content 1. 2H18 & FY18 results discussion | Investment portfolio Late stage • Water Utility • Housing Development • P&C Insurance Early stage • Renewable Energy • Hospitality & Commercial Real Estate • Beverages 2. Appendices Page 17
Slide 18: P&C insurance business financial highlights
P&C insurance business financial highlights Income statement Balance Sheet Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change GEL thousands, unless otherwise noted Dec-18 Dec-17 change Gross premiums written 44,713 39,284 13.8% 45,885 -2.6% 90,598 88,47
Slide 19: P&C insurance business financial highlights: cash flow
P&C insurance business financial highlights Statement of Cash Flow Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change Insurance premium received 43,014 41,114 4.6% 38,131 12.8% 81,145 77,287 5.0% Reinsurance premium paid (7,748) (10,141) -23.6% (7,327)
Slide 20: P&C insurance market overview
P&C insurance market overview Market & Aldagi Revenue (GEL millions) Market Share 9m18 (earned premium, gross) Market PL & Combined Ratio 9m18 Water Utility Market Aldagi Market share Total Market Profit 227 GEL 31.9 mln 12.2 * CAGR 2010-2017 202 Market – 11% 179 Development Aldagi – 17% 111% Housin
Slide 21: P&C insurance business performance highlights
P&C insurance business performance highlights Water Utility Earned Premium, gross (GEL millions) Earned Premium, gross | Composition Profit (GEL millions) +5.2% y-o-y +4.8% y-o-y GEL 90.4 mln Other, GEL 17.1mln 85.9 90.4 Government,Compulsory 16.3 17.7 lines, 6% 15% 5% Development 5.8 Housing 34.3 4
Slide 22: P&C insurance business overview
P&C insurance business overview Well-diversified business model Water Utility (1) Sources: Insurance State Key Segments Motor(2) Property(3) Credit life(4) Liability(5) Other(6) Supervision Service of Georgia. Market shares by earned Market size (9m18) (1) GEL 85mln GEL 56mln GEL 26mln GEL 25mln GEL
Slide 23: Expansion into Motor service business
Expansion into Motor service business – opportunity to develop unique platform with significant synergy potential Water Utility Key facts 51 Inspection Lines As part of the Georgia-EU Association Agreement, Georgia will Tbilisi • 10 inspection centers in most convenient places in Development impleme
Slide 24: Content
Content 1. 2H18 & FY18 results discussion | Investment portfolio Late stage • Water Utility • Housing Development • P&C Insurance Early stage • Renewable Energy • Hospitality & Commercial Real Estate • Beverages 2. Appendices Page 24
Slide 25: Renewable energy financial highlights
Renewable energy financial highlights Water Utility Income statement Balance Sheet GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change GEL thousands, unless otherwise noted Dec-18 Dec-17 Change Total Revenue - - NMF - NMF NMF Total current assets 11,895 15,555 -23.5%
Slide 26: Renewable energy financial highlights: cash flow
Renewable energy financial highlights Water Utility Cash flow statement GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change Cash paid to suppliers (459) 170 NMF (171) NMF (630) (1,335) -52.8% Cash paid to employees 35 536 -93.5% (244) NMF (209) (223) -6.3% Development
Slide 27: Renewable energy business overview
Renewable energy business overview Energy Water Utility GEL millions, unless otherwise noted Renewable energy platform (develops and invests in renewable energy projects in the underdeveloped Key Highlights 2018 2017 change Georgian energy sector) Development Revenue n/a n/a n/a Housing Hydro Wind S
Slide 28: Georgian electricity market overview
Georgian electricity market overview Electricity supply and consumption, 2018 Actual and forecasted consumption Water Utility GWh Source: ESCO GWh 1,500 23,000 6.6 TWh 1,000 18,000 Development 13,000 Housing 500 8,000 0 3,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Generation, renewables1 Ge
Slide 29: Renewable energy project pipeline
Renewable energy project pipeline Water Utility Project pipeline Generation ▪ Renewable Energy continues to build ground for its 500MW operating Construction Target Target Project MWs capacity capacity medium-term target. It searches for opportunities to develop new commencement Commissioning2 ROIC
Slide 30: Renewable energy business strategy
Renewable energy business strategy Water Utility Business strategy Medium term outlook Targeting • Renewable Energy is on track to commission Mestiachala HPP in 1H19 and start Development Housing construction works in 2H19 on 46 MW Zoti HPPs and 111 MW wind projects • The business will continue to d
Slide 31: Content
Content 1. 2H18 & FY18 results discussion | Investment portfolio Late stage • Water Utility • Housing Development • P&C Insurance Early stage • Renewable Energy • Hospitality & Commercial Real Estate • Beverages 2. Appendices Page 31
Slide 32: Real estate business financial highlights
Hospitality & Commercial real estate business financial highlights Water Utility Income statement Balance Sheet GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change GEL thousands, unless otherwise noted Dec-18 Dec-17 change Gross profit from operating leases 2,688 1,54
Slide 33: Real estate business financial highlights: cash flow
Hospitality & Commercial real estate business financial highlights Water Utility Statement of Cash Flow GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change Net proceeds from rent generating assets 3,290 1,555 NMF 2,124 54.9% 5,414 3,042 78.0% Net proceeds from hospita
Slide 34: Targeting to spin-off yielding properties as a listed REIT
Targeting to spin-off yielding properties as a listed REIT managed by m2 Water Utility Hospitality & Commercial real estate – Market of US$ 6.8bln1 1 Rent-earning assets 2 Hotels Grow Portfolio of rent-earning assets through Develop hotels with combined room-count of Development residential developm
Slide 35: Hospitality & commercial real estate business performance highlights
Hospitality & commercial real estate business performance highlights Strong Performance Water Utility Key highlights Yielding portfolio growth Yielding portfolio composition All amounts in GEL millions 2018 2017 Change 39.6% 42 42 Revenue 38.5 4.6 NMF 30 4 68.7% Development US$ millions 30 Housing N
Slide 36: Hospitality business overview
Hospitality business overview Hotel rooms by types | operational, construction, design stages Hotel rooms by types | operational, construction, design stages Water Utility Luxury Hotel, Under 9% Budget Construction, Hotel, 24% Design, 31% 56% Development Housing Business Hotel, 22% P&C Insurance Res
Slide 37: Hospitality & commercial real estate business – market opportunity
Hospitality & commercial real estate business – market opportunity Arrivals of tourists and tourism revenue | Georgia Key performance metrics of hotels | Tbilisi Arrivals at airports (mln) | Georgia Water Utility Source: Georgian National Tourism Administration Source: STR Source: Georgian Civil Avi
Slide 38: Content
Content 1. 2H18 & FY18 results discussion | Investment portfolio Late stage • Water Utility • Housing Development • P&C Insurance Early stage • Renewable Energy • Hospitality & Commercial Real Estate • Beverages 2. Appendices Page 38
Slide 39: Beverages financial highlights
Beverages financial highlights Water Utility Income statement Balance Sheet GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change GEL thousands, unless otherwise noted Dec-18 Dec-17 change Wine Business 20,346 13,457 51.2% 10,757 89.1% 31,103 22,101 40.7% Cash and cash
Slide 40: Beverages financial highlights: wine cash flow
Beverages financial highlights Wine Business - Statement of Cash Flow Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change Cash received from customers 20,818 14,193 46.7% 11,697 78.0% 32,515 23,233 40.0% Cash paid to suppliers (13,710) (9,485) 44.5% (4,4
Slide 41: Beverages financial highlights: beer cash flow
Beverages financial highlights Beer Business - Statement of Cash Flow Water Utility GEL thousands, unless otherwise noted 2H18 2H17 Change 1H18 Change FY18 FY17 Change Proceeds from sales 26,518 21,764 21.8% 18,189 45.8% 44,707 23,069 93.8% Cash outflows for inventory (10,639) (6,496) 63.8% (8,302)
Slide 42: Beverages targets & priorities
Beverages targets & priorities Targeting to become leading beverages producer and distributor in Caucasus Water Utility Wine business Distribution business Beer business Russian Federation Caspian Development Black Housing Sea Sea Poti Georgia Batumi Tbilisi Rustavi Azerbaijan Baku Turkey Armenia P&
Slide 43: Beverages performance highlights
Beverages performance highlights Key Highlights Wine Exports Dynamics (millions of bottles) Water Utility Export sales, are presented excluding wine sales to Russia All amounts in GEL millions 2018 2017 Change 2014 21.5 Revenue 76.2 55.7 36.8% 1.7 EBITDA (6.4) 0.9 NMF 2015 17.8 Development 1.4 Housi
Slide 44: Content
Content 1. 2H18 & FY18 results discussion | Investment portfolio Late stage • Water Utility • Housing Development • P&C Insurance Early stage • Renewable Energy • Hospitality & Commercial Real Estate • Beverages 2. Appendices Page 44
Slide 45: Glossary
Glossary ▪ Georgia Capital and “the Group” refer to Georgia Capital PLC and its portfolio companies as a whole. ▪ NMF – Not meaningful. ▪ LTM – last twelve month. ▪ EBITDA - Earnings before interest, taxes, non-recurring items, FX gain/losses and depreciation and amortization; The Group has presente
Slide 46: Georgia Capital PLC company information
Georgia Capital PLC company information 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
Slide 47: Georgia Capital
GEORGIA CAPITAL